Page 11 - NorthAmOil Week 30

NorthAmOil COMMENTARY NorthAmOil

Oil rig count inches up

instead of another fall

The slight weekly increase in the oil rig count was cancelled

out by declines in the number of gas rigs, but is nonetheless

being welcomed by the industry as a positive sign

US THE US’ active rig count fell to a record low for coronavirus (COVID-19) pandemic.
a twelfth straight week in the week up to July 24, The gas rig count had been on a gradual
WHAT: according to the latest data from oilfield services decline since before March – indeed, since early
The US oil rig count rose firm Baker Hughes. But there was a bright spot 2019 – on the back of low natural gas prices. But
slightly last week in the as the oil rig number edged up slightly, despite because the gas rig count was comparatively
first increase since mid- being cancelled out by another decline in gas small, the recent continued decline has not been
March, despite an overall rigs. nearly as striking as the collapse in oil rig num-
decline. The oil rig count increased by one, to 181, fol- bers. Since the week up to March 13, active gas
lowing 18 straight weeks of declines that began rigs fell from 107 to 68. In the week up to July 24,
WHY: in mid-March when crude prices collapsed, the gas rig count dropped by three, wiping out
Shale drillers are prompting producers to start immediately cut- the slight oil rig increase.
cautiously stepping up ting capital budgets and activity. Shale operators A closer look at regional numbers shows that
activity again following a can respond particularly quickly to oil price oil rig numbers actually edged up in three basins
period of relative oil price swings, and this – combined with the fact that – the Permian, the Eagle Ford shale and the
stability. the majority of active rigs in the US are shale-fo- Granite Wash – only for these gains to be can-
cused – means the country’s oil rigs have seen celled out by rigs being cut elsewhere. Indeed,
WHAT NEXT: a dramatic decline over the past few months. this was the second straight week that the oil rig
Shale production declines At the start of the year the US oil rig count was count had risen slightly in the Eagle Ford.
are expected to continue at 670, and it peaked at 683 in the week up to
in the short term. March 13 before falling by nearly 74% over the Cautious resumption
period until last week. The decline was also far The increases show the shale industry cautiously
more rapid than usual – as rig counts typically resuming some activity, in line with comments
lag oil price trends by up to one quarter – illus- from a number of operators saying they are
trating the severe impact of global oversup- in the process of restoring curtailed output.
ply coupled with the hit on demand from the Generally speaking, though, the curtailments

The recovery in fracking
activity is already more
evident in the Permian
Basin than in other
shale regions.

Week 30 30•July•2020 www. NEWSBASE .com P11