Source: Bob Williams, Director of Content, S&P Global Platts Analytics, May 31, 2018

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Private Companies Leading the Pack for US Rig Gains

So it appears that the magical 1,000 active rig threshold was just a tease.
For the entire second quarter to date, the delta between top and bottom active
land rig counts has been just 13, and the net sequential change has been +15. In Q1,
the comparable delta was 57, and the net change was +118.

Leading the pack in rig gains have been private companies, with their aggregate
rig counts up by almost 11% quarter-to-quarter. In the past, that would have meant
a spike in the sub-1,000 hp rigs that long were the go-to models for these small,
private companies. But this group has been relatively flat QTQ, with Class B (500–999
hp) slipping, offset by gains in Class A rigs.

We have seen the shallow oil rig tally jump by 31% QTQ, however, which dovetails
with the Class A increases and matches exactly the comparable rig count gain a year
ago. But it’s also the same exact average numbers QTQ of shallow rigs YOY. So it’s
doubtful this could have catalyzed a big jump in US oil production, which reached
an all-time record high of 10.47 million in March of this year, according to EIA. The
rigs drilling >5,000 ft rose by 22% QTQ last year but only 5% QTQ this year. It’s taking
fewer rigs to produce much bigger increases in oil production.

Meantime, the average NYMEX crude futures prompt price was about $63/bbl in
Q1 and $68/bbl in Q2/bbl. Twelve month strips show a steady if not steep decline to
the mid-$60s.

And yet we hear a buzz about a return to $80/bbl or even $100/bbl, couched mainly
in terms of sanctions on Iran and the slow motion collapse of Venezuela while oil
demand continues to advance, catalyzed by growth in developing countries. Maybe
the buzzworthy should pay attention to the previous two paragraphs.

 

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.com or call 800-371-0083.

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