US onshore rig count
During the week ended October 9, 2015, the US onshore rig count fell by 16 from the previous week’s count. Last week, there were 763 land-based (or onshore) rigs, including three inland water rigs. In the last seven weeks, 90 onshore rigs, or 11%, have been idled. Currently, the onshore rig count is at its lowest since January 2003.
In a statewide rig breakdown, Oklahoma lost six onshore rigs last week. Seven other states also lost onshore rigs last week. In comparison, only two states added onshore rigs last week. The US onshore rig count was on a continuous slide until the week ended May 22, falling for 25 straight weeks. After slightly stabilizing for a while, the count is falling again.
Most prolific states
In the 12 months ended October 9, 2015, the land-based US rig count fell by 1,109, or 59%. The number of active land-based rigs decreased the most in Texas, where 541 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 US with 353, or 46%, out of the total. Oklahoma is next, with 91 land-based rigs, and North Dakota follows with 64.
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 reached 1,876 in the week ended November 21, 2014. In total, 1,113 onshore rigs have gone offline since then, representing a fall of ~59%.
Impact on energy companies
The total onshore rigs in operation mainly reflect 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 land-based and offshore drilling services and technologies. They include National Oilwell Varco (NOV), FMC Technologies (FTI), 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 hurt midstream MLPs such as 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.