Rig Count Decline Pace Continues to Slow; U.S. Production Decline Largest in Three Months

Rig Count Decline Pace Continues to Slow; U.S. Production Decline Largest in Three Months

2nd April 2015

The Baker Hughes U.S. onshore rig count continued its decline this week, falling by 17 rigs compared to drops of 18 and 45 for the prior two weeks.  This week’s drop of 17 rigs is the smallest week-on-week drop of 2015.  The rig count has now declined by 879 (47%) from a November 2014 high of 1,876 to 997 on 02 April 2015.  This is the first time since October 2009 that U.S. onshore rig count falls below 1,000.  Rigs active in the Gulf of Mexico dropped 4, out of which 2 are oil focused.  Currently there are 22 oil rigs and 7 gas rigs active in the Gulf of Mexico.

Rig counts in the three major oil producing basins remained relatively constant, with a total drop of 9 rigs across the Permian Basin, Eagle Ford and Williston Basin (Bakken).  The Permian Basin dropped only 3 rigs this week and the Eagle Ford maintained the rig count reported last week.  The Williston Basin dropped 6 rigs compared to drops of 2 and 5 for the prior two weeks with 91 active rigs.  All three basins currently sit at their lowest active rig counts since pre-2011.

Changes this past week place the GCA Index for U.S. onshore rigs at 56, down 48 points from the 2014 high and down1 point from the previous week.  The onshore rig count index decrease has now essentially tracked the 2008-9 since the beginning of February.  Oil rig indices for the Permian dropped 1 point to 52 and for Williston Basin dropped 3 points to 50, while the index for Eagle Ford remain flat at 59, the highest among the three major producing basins.

U.S. oil inventories rose 5 million barrels to 471 million barrels for the week ending as of 27 March 2015, building on the  80-year high according to the EIA.   Storage at Cushing, Oklahoma rose 2.6 million barrels vs 1.9 and 2.9 million barrels the prior two weeks.  Lower 48 crude production dropped 37,000 barrels per day to 8,874 MBbl/day, marking the largest decline observed since January.  The price of WTI remained stable week-on-week closing at US$ 49.46/Bbl. The Brent-WTI spread further decreased to approximately $6/Bbl vs. $8/Bbl last week as of close of business Thursday, with Brent closing at US$ 55.57/Bbl, a US$ 2/Bbl decrease week-on-week.  

Authors

Rig Count Decline Pace Continues to Slow; U.S. Production Decline Largest in Three Months

Cecilia Jing Cui

Consultant, Petroleum Economist - cecilia.cui@gaffney-cline.com
Rig Count Decline Pace Continues to Slow; U.S. Production Decline Largest in Three Months

Neil Abdalla

Senior Professional, Geoscientist - neil.abdalla@gaffney-cline.com

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