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The US Onshore Rig Count Falls 4% in 3 Weeks

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US onshore rig count

During the week ended September 11, 2015, the US onshore rig count fell by 14 from the previous week’s count. Last week, there were 817 land-based (or onshore) rigs, including four inland water rigs. Inland water rigs remained unchanged last week. In the last three weeks, 36, or 4% of onshore rigs have been idled.

In a statewide break-up of rigs, Texas lost nine onshore rigs last week. Five other states also lost onshore rigs last week. In comparison, two states added onshore rigs last week. After falling for 25 straight weeks, the US onshore rig count was on a continuous slide until the week ended May 22. After looking more stable since then, they seem to be turning downward again.

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Most prolific states

In the 12 months ended September 11, 2015, the land-based US rig count fell by 1,048, or 56%. The number of active land-based rigs decreased the most in Texas, where 537 rigs shut down. North Dakota lost 115 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 366, or 45%, of the total. Oklahoma is next, with 106 land-based rigs, and North Dakota follows with 70.

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 records, according to Baker Hughes. Then, the onshore rig count reached 1,876 in the week ended November 21, 2014. In total, 1,059 onshore rigs have gone offline since then, representing a fall of ~56%.

Impact on energy companies

The total onshore rigs in operation mainly reflect the US shale boom. Apart from oil and gas companies, the falling rig count can negatively affect oilfield service companies. These companies provide various land-based and offshore drilling services and technologies. They include Cameron International (CAM), FMC Technologies (FTI), Dresser-Rand Group (DRC), and Weatherford International (WFT). Cameron International forms 0.07% of the SPDR S&P 500 ETF (SPY).

A decreasing rig count could also potentially hurt midstream MLPs like Targa Resources Partners (NGLS), Sunoco Logistics Partners (SXL), Boardwalk Pipeline Partners (BWP), and Energy Transfer Partners (ETP) in the long term. Falling rigs could decrease these companies’ throughput volumes.

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