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Permian Basin Defied the Oil Rig Trend in the September 18 Week

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Permian Basin rig count

Currently, there are 644 working oil rigs in the US. The Permian Basin accounts for 250 of these rigs—more than any other region. The Eagle Ford Shale has 77 active oil rigs, the Williston Basin has 68, and the Cana-Woodford has 36.

The Permian Basin oil rig count rose by two in the week ending September 18. On average, the Permian Basin crude oil rig change was zero in the four weeks ending September 18. The basin lost one oil rig on average in the four weeks ending September 11. The four-week averages give a smoother view of this trend, which otherwise can be quite volatile on a weekly basis.

In the 12 months ending September 18, 2015, the number of active oil rigs in the Permian Basin fell by 307, or 55%. In June, the Permian Basin rig count hit 231—its lowest level since July 2010.

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What does this mean?

Over the past year, the steep fall in the Permian Basin’s rig count suggests that producers operating in this region reduced their drilling activity. This reduction can slow these companies’ production growth or even reduce their production. The number of oil rigs in the Permian Basin rose nine times in the past 12 weeks. This hints at a potential production rise. If Permian rigs continue to rise like they did last week, the Permian Basin production could start rising.

To find out more about the oil rig counts in the Permian Basin, read Permian Shale’s July Crude Oil Production Growth Slowest in 2015. 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 1.30% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Whiting Petroleum accounts for 0.24% of the iShares North American Natural Resources ETF (IGE). If the Permian Basin’s oil production rises, it would increase the oil and gas volume of midstream operators transporting oil and gas in this region. These operators include MLPs like 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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