27th February 2015
Rig Count and Oil Price
The Baker Hughes U.S. onshore rig count continued its decline this week, falling by 40 compared to 50 the previous week. The rig count has now declined by 660 (35%) from a November 2014 high of 1,876, to 1,216 on 27 February 2015. The fall for onshore rigs has slowed two weeks in a row, but it is still too early to see when activities will touch bottom.
- 20 Feb 2015 - Rig Count Decline Halves From Prior Weeks - Blip or Green Shoots?
- 13 Feb 2015 - Rig Count Fall Accelerates Past 2009 Levels
- 6 Feb 2015 - Rig Index Continues Sharp Drop Despite A Rising Oil Price
Brent price continued to hold relatively flat around the US$60/Bbl mark. However WTI fell more than US$2.50/Bbl during the week to around US$49/Bbl, with the WTI-Brent spread widening to around US$12-13/Bbl. The widening of the spread from the start of the year reflects a number of factors, including the increase in storage at Cushing caused by continued robust U.S. production along with reduced refinery runs affected by cold weather and seasonal turnarounds. On the other hand Brent prices are being supported by decreased output of Libyan crude.
Rig count reductions for the week were again modest in the Permian Basin, with 7 rigs being laid down versus 6 in the prior week and 48 the week before that. Eagle Ford rigs were down 5, compared to 4 and 6 in the prior two weeks. The drop in the Williston (Bakken) jumped to 11 from 5 in the prior week, although this may just be “reporting noise”.
In the Gulf of Mexico the rig count was down 3, all gas-focused rigs.
Rig Count and Oil Price Indices
In order to provide a relative comparison, the GCA Indices for rig count and oil price compare today’s data with the average in the three month period April to June 2014. Changes this past week place the GCA Index for U.S. onshore rigs at 68, 36 points down on the 2014 high and 2 points down on the previous week. This is still right on the 2008-2009 trend, but with a hint that it may flatten sooner than seen then. The Brent Oil Index stayed flat for the week, although the WTI Oil Index (included for the first time this week) fell by 2 points.
Looking more specifically at the major onshore basins where unconventional (tight and shale) oil are being developed (Permian, Eagle Ford and Williston Basin), which together represent 60% of the oil-targeted activity, the drop continues to slightly exceed the overall onshore rig count change, being between to 39 to 48 points off 2014 highs, compared to 36 overall.
The rig count in these basins is down 23 in the week, with the GCA Indices now ranging from 61 (Williston) to 65 (Eagle Ford, Permian), the former suffering the largest decline this week with 11 rigs being cut. The GCA Index for all three basins combined is 64, a drop of 2 points in the week.
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