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Permian Basin Rig Count Holds Steady, Adds 1 in July 2 Week

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Permian Basin rig count

Currently, there are 640 working oil rigs in the US. The Permian Basin has 231 of the rigs—more than any other region. The Eagle Ford Shale has 86 active oil rigs, the Williston Basin has 76, and the Mississippian Lime has 19.

The Permian Basin’s oil rig count rose by one in the week ending July 2. In aggregate, one Permian Basin oil rig was idled in the four weeks ending July 2. Rigs in action didn’t change in aggregate in the four weeks ending June 26. The Permian Basin rig count had only risen four times in the past 30 weeks. Before this week, the last time in rose was in the week to May 8.

In the 12 months ending July 2, 2015, the number of active oil rigs in the Permian Basin fell by 324, or 58%. The Permian Basin rig count is at its lowest level since May 2010.

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What does this mean?

Over the past seven months, the steep fall in the Permian Basin’s rig count suggests that producers operating in this region have reduced their drilling activity. This will likely slow their production growth or even reduce production. RSP Permian (RSPP), Laredo Petroleum (LPI), Concho Resources (CXO), Matador Resources (MTDR), and Whiting Petroleum (WLL) are upstream producers operating in the Permian Basin.

Laredo Petroleum forms 1.1% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Whiting Petroleum accounts for 0.41% of the iShares U.S. Energy ETF (IYE). If the Permian Basin’s oil production falls, the midstream energy operators transporting oil and gas in this region would also be hit. These MLPs (master limited partnerships) include Magellan Midstream Partners (MMP), Regency Energy Partners (RGP), Plains All American Partners (PAA), and Energy Transfer Partners (ETP).

About the Permian Basin

The Permian Basin is a combination of the Midland Basin and the Delaware Basin in West Texas and southern New Mexico. According to the EIA (U.S. Energy Information Administration), the Permian Basin produces the most crude oil in the US.

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