Source: RigData RADAR Report, 8/18/16

Since bottoming at a record low 335 in May, per RigData’s RADAR Report, the US land rig count has logged double-digit gains week-to-week 9 of 12 times. Month-to-month, June’s average tally improved over May’s by 26 units, and July topped June by 52. But August to date has regressed, topping July’s average by only 25.

The Permian Basin has been the key driver in the rig count uptick, accounting for more than half of the rigs added since mid-May. But Permian permit numbers diverged sharply from the increase in Permian rigs in Q3—down by -6% vs. a gain of +30%, respectively. Although Permian permits lagged rig count growth in Q3, the picture changes when the focus is solely on Permian unconventional plays, which entail more wells per rig vs. conventional drilling. In Q3, Permian unconventional play permits are up so far by +31% vs. a gain of +26% for the unconventional rig count vs. Q2. This suggests that 2H Permian rig count gains will continue to be relatively restrained.

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