Natural gas rigs
The number of active natural gas rigs was 228 a year ago. Notably, the natural gas rig count for the week ending June 24, 2016, was 94.4% lower than its peak in 2008. The rig count reached a historic high of 1,606 in 2008.
Crude oil rigs and natural gas production
Despite the fall in the number of natural gas rigs since August 2008, natural gas production continued to rise. This can be explained by the fact that natural gas is an associated product of crude oil extraction. Over the past ten years, natural gas production has moved more in tandem with the crude oil rig count than with the natural gas rig count.
Rising crude oil prices after the subprime mortgage crisis kept the number of oil rigs rising until June 2014. With increasing crude oil extraction, the natural gas production also kept rising. Increasing rig efficiency helped US natural gas companies produce more natural gas with fewer rigs.
Natural gas prices and stocks
This trend helped boost natural gas production and suppress natural gas prices, despite a fall in the number of active natural gas rigs. In this way, the crude oil rig count is an important factor for natural gas–weighted stocks such as Comstock Resources (CRK), WPX Energy (WPX), Southwestern Energy (SWN), EXCO Resources (XCO), Ultra Petroleum (UPL), and Antero Resources (AR).
In the next part of this series, we’ll discuss natural gas inventories.