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US Onshore Rig Count Increases Are Widespread across the US

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Onshore rig count

During the week ended August 21, 2015, the US onshore rig count increased by four from the previous week’s count. Last week, there were 853 land-based (or onshore) rigs, including six inland water rigs. In a state-wise break-up of rigs, nine states added onshore rigs while six states lost onshore rigs last week.

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

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Most prolific states

In the 12 months ended August 21, 2015, the land-based US rig count fell by 979, or 53%. The number of active land-based rigs decreased the most in Texas, where 503 rigs shut down. North Dakota lost 111 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 383, or 45%, of the total. Oklahoma is next, with 106 land-based rigs, and North Dakota follows with 72.

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. Then, the onshore rig count reached 1,876 in the week ended November 21, 2014. In total, 1,023 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. These companies provide various land-based and offshore drilling–related services and technologies. They include Cameron International (CAM), FMC Technologies (FTI), Dresser-Rand Group (DRC), and Weatherford International (WFT). Cameron International forms 0.05% of the SPDR S&P 500 ETF (SPY).

The 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 could increase these companies’ throughput volumes.

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