US onshore rig count
During the week ended November 13, 2015, the US onshore rig count fell by five. In the week ended November 13, there were 734 land-based, or onshore, rigs, including three inland water rigs. Two inland water rigs were idled in the week ended November 13.
Over the past 12 weeks, 119 onshore rigs, or 14%, have been idled. As of November 13, the onshore rig count is at its lowest point since January 2003.
In a statewide breakdown of rigs, Texas lost three onshore rigs on the week ended November 13. Four other states also lost onshore rigs last week. In comparison, two states added onshore rigs during the week. The US onshore rig count had been on a continuous slide until the week ended May 22, falling for 25 straight weeks. After slightly stabilizing for a time, the count started falling again.
Most prolific states
In the 12 months ended November 13, 2015, the land-based US rig count fell by 1,142, or 61%. The number of active land-based rigs fell the most in Texas, where 564 rigs, or 64%, shut down. North Dakota lost 119 rigs, or 66%, over the same 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 337, or 46%, out of the country’s total as of November 13, 2015. Oklahoma comes next, with 85 land-based rigs, and North Dakota follows with 62 as of the same date.
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 ended November 21, 2014. In total, 1,142 onshore rigs have gone offline since November 21, 2014, representing a fall of ~61%.
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 and 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 (NGLS), Sunoco Logistics (SXL), Boardwalk Pipeline (BWP), and Energy Transfer Partners (ETP). A falling number of rigs could lower the throughput volumes of these companies.
Please continue to the next part of this series for our analysis of the US offshore rig count as of November 13, 2015.