North America Loses Rigs Week on Week

North America dropped six rigs week on week, according to Baker Hughes’ latest North America rotary rig count, which was released on June 27.

Although the U.S. dropped seven rigs week on week, Canada added one rig during the same timeframe, taking the total North America rig count down to 687, comprising 547 rigs from the U.S. and 140 rigs from Canada, the count outlined.

Of the total U.S. rig count of 547, 533 rigs are categorized as land rigs, 12 are categorized as offshore rigs, and two are categorized as inland water rigs. The total U.S. rig count is made up of 432 oil rigs, 109 gas rigs, and six miscellaneous rigs, according to Baker Hughes’ count, which revealed that the U.S. total comprises 496 horizontal rigs, 38 directional rigs, and 13 vertical rigs.

Week on week, the U.S. land rig count reduced by five, its offshore rig count decreased by two, and its inland water rig count remained unchanged, the count highlighted. The country’s oil rig count dropped by six, its gas rig count dropped by two, and its miscellaneous rig count increased by one, week on week, the count showed. The U.S. horizontal rig count dropped by six, its directional rig count dropped by two, and its vertical rig count increased by one, week on week, the count revealed.

A major state variances subcategory included in the rig count showed that, week on week, Wyoming dropped five rigs, and Oklahoma, Louisiana, and Colorado each dropped one rig. A major basin variances subcategory included in Baker Hughes’ rig count showed that, week on week, the Granite Wash basin dropped one rig and the Permian basin dropped one rig.

Canada’s total rig count of 140 is made up of 94 oil rigs and 46 gas rigs, Baker Hughes pointed out. The country’s oil rig count increased by one week on week and its gas rig count remained unchanged during the period, the count revealed.

The total North America rig count is down by 70 rigs compared to year ago levels, according to Baker Hughes’ count, which showed that the U.S. has cut 34 rigs and Canada has cut 36 rigs, year on year. The U.S. has dropped 47 oil rigs and added 12 gas rigs and one miscellaneous rig, while Canada has dropped 22 oil rigs, 13 gas rigs, and one miscellaneous rig, year on year, the count outlined.

In a research note sent to Rigzone by the JPM Commodities Research team on Friday, J.P. Morgan analysts highlighted that “total U.S. oil and gas rigs decreased by seven to 547 this week, according to Baker Hughes”.

“Oil focused rigs decreased by six to 432 rigs, after losing one rig last week. Natural gas focused rigs decreased by two to 109 rigs, following a decrease of two rigs week over week last week,” they added.

“The rig count in the five major tight oil basins – we use the EIA [U.S. Energy Information Administration] basin definition – decreased by six to 418 rigs. The rig count in two major tight gas basins remained unchanged at 74 rigs,” they continued.

“The U.S. oil focused rig count declined by six this week, marking a continuation of the structural downtrend in activity. The most notable reversal came from the Niobrara, where four rigs were dropped, fully reversing the two-rig gain observed the week prior,” they went on to note.

“The Anadarko Basin also saw further weakening, shedding one rig and now stands at 44 active oil rigs – down from 52 at the end of May, a net loss of eight rigs over the past month. In Midland, one additional rig was idled this week, bringing the total Permian net loss in June to seven rigs,” the analysts said.

The analysts stated in the note that, across all major tight oil basins, a total of 19 oil rigs have been lost since the end of May.

“Looking forward, we anticipate further moderation in rig activity, with an additional ~9 oil rigs likely to be removed during July,” they added.

“Despite this sustained pullback in the rig count, U.S. crude oil production continues to grow on a year over year basis, albeit at a slower pace than observed earlier,” they continued.

Rigzone has contacted the U.S. Department of Energy (DOE) and the American Petroleum Institute (API) for comment on J.P. Morgan’s research note. At the time of writing, the DOE and API have not responded to Rigzone.

In its previous rig count, which was released on June 20, Baker Hughes revealed that the total North America rig count remained unchanged week on week. The U.S. dropped a total of one rig week on week, while Canada added a total of one rig week on week, that count showed.

Baker Hughes’ June 13 rig count showed that North America added 20 rigs week on week. The company’s June 6 rig count showed that North America cut two rigs week on week, its May 30 rig count showed that North America dropped five rigs week on week, its May 23 count showed that North America dropped 17 rigs week on week, and its May 16 rig count showed that North America added five rigs week on week.

Baker Hughes’ May 9 rig count revealed that North America cut 12 rigs week on week, its May 2 count revealed that North America dropped 11 rigs week on week, and its April 25 count revealed that North America dropped four rigs week on week.

Baker Hughes’ April 17 count showed that North America dropped two rigs week on week, its April 11 rig count revealed that North America cut 22 rigs week on week, the company’s April 4 rig count showed that North America cut 12 rigs week on week, its March 28 count revealed that North America cut 18 rigs week on week, and its March 21 rig count also revealed that North America cut 18 rigs week on week. Baker Hughes’ March 14 count showed that North America dropped 35 rigs week on week and its March 7 rig count revealed North America cut 15 rigs week on week.

In its February 28 rig count, Baker Hughes showed that North America added five rigs week on week. Its February 21 count revealed that North America added three rigs week on week, its February 14 rig count showed that North America dropped two rigs week on week, and its January 31 rig count showed that North America added 19 rigs week on week.

The company’s January 24 rig count revealed that North America added 12 rigs week on week, its January 17 count showed that North America added nine rigs week on week, and its January 10 rig count outlined that North America added 117 rigs week on week.

Baker Hughes’ January 3 rig count revealed that North America dropped one rig week on week and its December 27 rig count showed that North America dropped 71 rigs week on week.

Baker Hughes, which has issued rotary rig counts since 1944, describes the figures as an important business barometer for the drilling industry and its suppliers. The company notes that working rig location information is provided in part by Enverus.

To contact the author, email andreas.exarheas@rigzone.com