uploads///Onshore rigs

12% of US Onshore Rigs Idled in Past 8 Weeks: What’s the Impact?

By

Oct. 22 2015, Updated 5:05 a.m. ET

US onshore rig count

During the week ending October 16, 2015, the US onshore rig count fell by nine from the previous week’s count. Last week, there were 754 land-based (or onshore) rigs, including three inland water rigs.

In the last eight weeks, 99 onshore rigs, or 12%, have been idled. Currently, the onshore rig count is at its lowest point since January 2003.

In a statewide breakdown of rigs, New Mexico lost five onshore rigs last week. Six other states also lost onshore rigs last week. In comparison, only three states added onshore rigs during the week. The US onshore rig count was on a continuous slide until the week ending May 22, falling for 25 straight weeks. After slightly stabilizing for a time, the count is falling again.

Article continues below advertisement

Most prolific states

In the 12 months ending October 16, 2015, the land-based US rig count fell by 1,107, or 59%. The number of active land-based rigs decreased the most in Texas, where 545 rigs, or 61%, shut down. North Dakota lost 118 rigs, or 65%, 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 351, or 47%, out of the total. Oklahoma is next, with 89 land-based rigs, and North Dakota follows with 63.

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 was recorded at 1,876 in the week ending November 21, 2014. In total, 1,122 onshore rigs have gone off-line since then, representing a fall of ~60%.

Article continues below advertisement

Impact on energy companies

The total number of onshore rigs in operation mainly reflects the US shale boom. Apart from upstream oil and gas companies, the falling rig count can negatively affect oilfield service companies.

These companies provide various onshore and offshore drilling services and technologies. They include National Oilwell Varco (NOV), Oceaneering International (OII), Dresser-Rand Group (DRC), and Weatherford International (WFT). National Oilwell Varco forms 0.1% of the SPDR S&P 500 ETF (SPY).

A decreasing rig count could also potentially have a negative long-term impact on midstream MLPs such as Targa Resources Partners (NGLS), Sunoco Logistics Partners (SXL), Boardwalk Pipeline Partners (BWP), and Energy Transfer Partners (ETP). Falling rigs could decrease these companies’ throughput volumes.

Advertisement

More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.