US Onshore Rig Count Increased, but Decreased in Some States



Onshore rig count

During the week ended August 14, 2015, the US onshore rig count increased by three from the previous week’s count. Last week, there were 849 land-based (or onshore) rigs, including six inland water rigs. Six states added onshore rigs, and eight states lost onshore rigs last week.

The US onshore rig count was on a continuous slide until the week ended May 22, having fallen for 25 straight weeks. The onshore count seems to have bottomed out since then.

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Most prolific states

In the 12 months ended August 14, 2015, the land-based US rig count fell by 1,002, or 54%. The number of active land-based rigs decreased the most in Texas, where 511 rigs shut down. North Dakota lost 116 rigs over those 12 months.

Despite losing a significant number of rigs in the past year, Texas still has the most land-based rigs in the United States with 388, or 46%, of the total. Oklahoma is next, with 103 land-based rigs, and North Dakota follows with 69.

Onshore rig count records

The onshore rig count hit a record high of 1,992 on November 4, 2011, the highest number of rigs in operation since January 1990, according to Baker Hughes. The onshore rig count reached 1,876 in the week ended November 21, 2014. In all, 1,027 onshore rigs have gone offline since then, representing a fall of ~55%.

Impact on energy companies

The total onshore rigs in operation mainly reflect the US shale boom. Apart from oil- and gas-producing companies, the rising rig count should positively affect oilfield service companies, which provide various land-based and offshore drilling-related services and technologies. They include Cameron International (CAM), FMC Technologies (FTI), Dresser-Rand Group Inc. (DRC), and Weatherford International (WFT). Cameron International forms 0.05% of the SPDR S&P 500 ETF (SPY).

An increasing rig count could also potentially benefit midstream MLPs like Targa Resources Partners (NGLS), Sunoco Logistics Partners (SXL), Boardwalk Pipeline Partners (BWP), and Energy Transfer Partners (ETP) in the long term. Rising rigs would increase these companies’ throughput volumes.


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