US onshore rigs
During the week ending October 23, 2015, the US onshore rig count fell by two from the count in the week ending October 16. On the week ending October 16, there were 752 land-based (or onshore) rigs, including three inland water rigs.
Count falling again
In the last nine weeks, 101 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, Texas lost five onshore rigs last week. Five other states also lost onshore rigs last week. In comparison, six 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.
Most prolific states
In the 12 months ending October 23, 2015, the land-based US rig count fell by 1,120, or 60%. The number of active land-based rigs fell the most in Texas, where 558 rigs, or 62%, shut down. North Dakota lost 117 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 346, or 46%, out of the country’s total. Oklahoma is next, with 90 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, 1,124 onshore rigs have gone off-line since then, representing a fall of ~60%.
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 oil field 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 falling rig count could also potentially have a negative long-term impact on midstream MLPs such as Targa Resources Partners (NGLS), Sunoco Logistics (SXL), Boardwalk Pipeline Partners (BWP), and Energy Transfer Partners (ETP). A falling number of rigs could lower these companies’ throughput volumes.