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Will the US Natural Gas Rig Count Hit a New High in 2017?

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US natural gas rig count 

On May 26, 2017, Baker Hughes (BHI) will release its weekly US natural gas rig count report. For the week ending May 19, 2017, rigs rose by eight to 180 rigs—the highest level since December 11, 2015. The US natural gas rig count rose 4.6% for the week ending May 19, 2017—compared to the previous week. The rig count has risen 111.8% YoY (year-over-year). Rigs rose due to the rise in US natural gas (UNG) (GASL) (DGAZ) prices in 2016.

Higher natural gas prices will likely have a positive impact on drilling activity in 2017. The increase in drilling activity has a positive impact on oil and gas drillers such as Halliburton (HAL), Rowan Companies (RDC), Schlumberger (SLB), and Diamond Offshore Drilling (DO). 

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Peaks and lows in natural gas rigs 

The rig count hit a record high of 1,606 rigs on September 12, 2008—compared to a low of 81 rigs in the week ending August 26, 2016. The US natural gas rig count was ~88.7% below the peak. Rigs have risen 122.2% from the lows in August 2016.

Production estimates

The EIA (U.S. Energy Information Administration) estimates that US dry natural gas production will average 74.1 Bcf per day and 77.3 Bcf per day in 2017 and 2018, respectively. Read US Natural Gas Production Hit a 2-Year Low and Why Did US Natural Gas Consumption Hit a 3-Month Low? for more on natural gas production and consumption.

In the next part, we’ll look at some natural gas price forecasts.

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