January 2017 marks the first month to post a year-over-year increase in average land rig count since the downturn began. Per Platts RigData’s RADAR Report, the average tally of active rigs this month is 641; that’s an 88-rig, or +16%, YOY increase.

The YOY rig count increase is impressive, but drilling efficiencies don’t seem to be improving on recent gains. To a large extent that’s the result of two things:

1) The re-emergence of private operators as dominant players in the rig count, in response to the oil price recovery vs. sluggish gas drilling dominated by public companies; and

2) the continued cherry-picking (high-grading) of well locations to maximize returns in a still-uncertain oil price environment vs. the pad drilling-inflected full development mode that dominated during the boom. This theme will be examined in more granular detail in this week’s issue of the RADAR Report.

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