EOA Rig Count Report

It is all about the Permian!

MAIN TAKEAWAYS

• The total number of rigs declined by four from the previous week (oil: -5, gas +1).

• The oil-directed rig count in tight oil plays declined by only two WoW.

• Drilling activity usually declines at the end of the year.

• The oil-directed rig count in the Permian basin increased by one to 347. The Permian basin is leading drilling activities and will remain that way in the foreseeable future.

IN DETAIL

Baker Hughes reported today a decline in total rig count by 4 to 776 rigs.  The oil-directed-rig count declined by 5 to 620 and the gas-directed rig count increased by 1 to 154. However, the oil-directed rig count in tight oil plays declined by only two to 502.

Figure (1) below shows the US oil and gas rig count.  It shows how the growth in rig count declined recently as oil prices declined.

The large decline in natural gas rig count after the start of the shale oil revolution in 2010 was the result of increased gas production from tight-oil wells and increased productivity in natural gas wells.

Figure (1)