RigData Insights

Rig Count Growth Following Barbell Pattern

  • Tuesday, July 10, 2018
  • Posted By Greg Tsichlis

active rigs by operator type Source: S&P Global Platts Analytics

Rig Count Growth Following Barbell Pattern

Trey Cowan, Senior Industry Analyst, S&P Global Platts 

 

Privately held companies are responsible for most of the growth in the US rig count during 2018.

Represented by the purple line in the left-hand graph (which segments
the US land rig count by operator type); 270 private companies are using nearly 500 rigs to drill their wells. Relative to activity levels at the end of 2017, the privately held group’s rig count is up 91 rigs and accounts for 82% of the year-to-date growth in the overall rig count.

 

The rig counts of publicly traded producers (segmented by size) have
experienced a flatter trajectory year-to-date, with one exception. Represented by the red line in the graphs, the Majors (integrated oil companies whose membership includes Chevron, ExxonMobil, ConocoPhillips, Royal Dutch Shell, and BP) have increased their rig activity by 22% since the beginning of the year.

 


ExxonMobil an outlier

But digging in a little further we see that just one company (among the
Majors), ExxonMobil, was responsible for all of the segment’s growth year-todate.
In fact, ExxonMobil has nearly doubled its rig activity from the beginning
of the year until now—and with this rig growth has catapulted itself back into the
top spot in the rankings, having the most land rigs actively deployed in the US with
a fleet of 43 rigs.

 

The Permian, SCOOP/STACK, and Haynesville were all hosts to additional
rig activity where Exxon Mobil’s drilling fleet grew this year.

 

So the rig growth that we have seen thus far this year has followed a barbell
pattern in that the largest company drilling in the US and the typically small private
companies are leading the charge.

 

Output grows even with steady rig count
Meanwhile, the rank-and-file operators in the middle have shown little willingness to increase their drilling activity levels.


 


 

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However, the lack of upward change to rig counts by most publicly traded operators this year is not an indictment on production growth. The ever increasing well intensity shown by operators in the wells they have drilled of late continues to add more incremental units once these wells are completed relative to their predecessors. Thus, all else being equal, production is expected to rise even if drilling holds in a steady state here in the US.

 

The take-away for the back half of 2018 is that we would expect stability (in terms of drilling patterns) from much of the publicly traded operators at today’s prices or even a slight pullback in oil and natural gas futures.

 

But private operators have tended to exhibit more price sensitivity. Thus, a
slight slump in commodity prices could adversely impact this group’s plans (that currently directs about half the rig count activity) over the remainder of the year.

Upstream Activity Data for North America 

For more information on North American upstream activity including permitting, drilling activity, production and completion data please contact S&P Global Platts via email CustomerService.RigData@spglobal.com or call 800-371-0083.

 

 

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