The US oil and gas rig count fell by six to 407 in the week ended Dec. 30 as 2020 ended with activity down slightly more than 50% from the prior-year point, rig data provider Enverus said.
Total oil rigs dropped by seven to 293 on the week, while total gas rigs rose by one to 114. The number of horizontal rigs, which generally indicate high-producing shale/unconventional formations, was up by five to 335.
At end-2019, before the pandemic set in, 840 rigs were operating in the US.
But even as rig activity ended 2020 at a much lower level than where it began, total oil and gas rigs were up 30% in Q4 from Q3. The industry’s confidence has been buoyed with new vaccines against the coronavirus pandemic beginning to be distributed.
The current week’s drop in rigs, which followed a decrease of one rig in the prior week, comes after what was otherwise a streak of weekly adds that began in October at a time when US operators, concerned about their output targets, began boosting activity.
Consequently, the current decreases may just be seasonal noise, according to analyst Andrew Cooper of S&P Global Platts Analytics. In fact, Platts Analytics sees the rig count rising in 2021 to around 630 by December 2021, Cooper said.
In fact, Platts Analytics sees the shale rig count, which currently averages about 410 and excludes conventional rigs, rising in 2021 to around 630 by December.
Other analysts generally agree that the direction is up for not only total rigs but horizontals.
“Looking ahead to 2021, our initial outlook calls for roughly 400 horizontal rigs working by the end of the year versus [335] horizontal rigs which are active today,” investment bank Tudor Pickering Holt said in a Dec. 28 investor note.
In response to the pandemic, upstream operators reined in activity, cutting back drilling rigs and slashing capital spending. As a result, the 836 US oil and gas working across the US at the start of 2020 dropped sharply starting in March as the pandemic’s impact began to be felt in the form of plummeting crude demand and oil prices.
Oil prices especially have recovered from March, when levels in the high $40s/b plunged to half that level by the end of month and later to the $20s/b and teens.
For the week ended Dec. 30, WTI averaged $48.03/b, up a penny on week; while WTI Midland averaged $49.07/b, up 14 cents; and the Bakken Composite price averaged $44.86/b, up 10 cents, according to S&P Global Platts.
BASINS RELATIVELY CONSTANT
The US rig count was relatively constant among the largest individual basins, with tiny ticks up and down on week, and three basins holding steady.
The Eagle Ford Shale, of South Texas, gained two rigs for a total 32, while the gas-weighted Marcellus Basin (32 rigs), mostly in Pennsylvania, and the DJ Basin (nine), of Colorado, gained one rig each.
The Marcellus, now with its highest rig total since April, has climbed into the 30s in recent weeks as gas prices have firmed. Dominion South gas prices plunged to as low as 27 cents/MMBtu in early November but have recovered since and are hovering around $2/MMBtu.
Losing rigs this week were the Permian Basin of West Texas/New Mexico, down two to 182, and the SCOOP-STACK, down one to 15.
Three other large basins, the Haynesville Shale (46), of East Texas/Northwest Louisiana; the Bakken Shale (12), of mostly North Dakota; and the Utica Shale (six), mostly sited in Ohio, had no rig changes week on week.
Source: Platts
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US oil, gas rigs fall six to 407, ending 2020 50% lower year on year: Enverus - Hellenic Shipping News Worldwide
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