The US oil rig count continued its upward crawl for a third consecutive
week, rising on Friday by two to 751 amid persistently higher oil prices
and a growing confidence voiced by upstream operators now planning 2018
In addition, the Permian cracked the 400 mark for oil rigs, up by three
from last week and a 63% jump from the 246 working during the same week
in 2016, Baker Hughes said in its weekly North American rig count.
The last time the oil rig count was 400 or greater was the week ended
February 6, 2015, when 413 rigs were deployed, figures from Baker Hughes,
the world’s second-largest global oilfield service provider, showed.
“[We’ll see] a few more rigs added by year-end,” Evercore ISI analyst
James West said.
Baker Hughes uses data from S&P Global Platts RigData in calculating its
own rig count.
Analysts have said the relatively high oil prices in recent months most
likely prompted continued rig count adds, especially for smaller oil
companies that see a chance to drill a few more wells while dayrates
remain relatively low.
On Friday, NYMEX crude futures for January settled at $57.36/b, up 67
In a recent webinar, S&P Global Ratings Senior Director Simon Redmond
said he believes WTI oil will trade in the $50-$60/b range in 2018.
“The market is focused on a rebound in US shale oil production,” Redmond
After US crude growth of about 400,000 b/d in 2017, the US Energy
Information Administration has indicated growth of roughly 700,000 b/d in
2018, taking US production up to 9.9 million b/d, he said.
OPERATORS SAY THEY WILL BE DISCIPLINED
But despite the creeping-up rig count, operators have also conveyed in
presentations to analysts at energy conferences over the past week that
their 2018 spending plans will reflect moderation.
“I have more concerns about inflation and disruption than let’s step on
the accelerator,” Clay Gaspar, president and CEO for WPX Energy, said in
webcast remarks at the Cowen Energy Conference in New York.
“It’s tempting if oil gets to $62/b to add a few rigs and spend [the
extra cash flow] now, but that’s what has gotten our industry in trouble
in the past,” Gaspar said. “I think the tone you’ll hear from us is a
very disciplined growth.”
Meanwhile, the rest of the oil rig count changes were a hodgepodge of
one-off events. The DJ-Niobrara Basin in Colorado and the Mississippian
play in Oklahoma and Kansas each dropped by two oil rigs to 23 and four,
And, the Williston Basin in North Dakota and Montana dropped by one oil
rig to 47, while the “Others” category — a classification of
less-prominent plays that Baker Hughes tracks each week — fell by one to
The Eagle Ford Shale in South Texas rose by three oil rigs to 63 while
the Cana Woodford in central west Oklahoma gained one rig to 73. And, the
Haynesville Shale, a largely dry gas play in East Texas and Northwest
Louisiana, gained its sole oil-directed rig.
In addition, US rigs chasing natural gas held steady on Friday at 180 for
a second week. That follows a recent low of 169 last month.
The Haynesville also gained two gas rigs to 45, while the Marcellus Shale
largely in Pennsylvania gained three gas rigs, also for a total of 45.
But the Utica Shale in Ohio and the “Others” category each fell by three
gas rigs to 26 and 45, respectively.
The Barnett Shale in North Texas, the US shale play that set off the
shale boom in the early 2000s, also gained one gas rig to a total of
During the S&P Global webinar, Carin Dehne-Kiley, S&P Global Ratings
director, said she sees a flat total US rig count of about 920 in 2018.
That is slightly under the current total domestic rig count of 931 on
— Starr Spencer, firstname.lastname@example.org
— Edited by Derek Sands, email@example.com