The total number of operating rigs in the US the week ending April 21st was 857, 688 oil, (+5, +0.7% week on week) and 167, (+5, +3.1% week on week), gas. On a year on year (y/y) comparison, oil rigs have doubled, 100.6%. For gas, the y/y increase was 89.8%, while on a combined basis the increased count was +98.8%.
Figure 1 shows the Baker Hughes US Rotary Rig Counts for oil and gas equipment in the US through April 21st. US oil rig count are trending sharply higher. Since the low point in 2009 the count is up 284%. The gas rig count is up 34% from count at the time of the BP explosion. Oil and gas prices are on the rise which is the key driver for the increase in rig counts.
Referencing Bloomberg Energy, Brent crude oil was $51.46 per barrel today (4/24/2017) up 15.7% from $44.48 per barrel last year. Similarly West Texas Intermediate (WTI) crude oil sold for $49.22 per barrel today, up 15.4% from $42.64 a year ago. Natural gas increased the most in percentage term rising 48.7% y/y from $2.063 per MMBtu to $3.067 per MMBtu. Higher energy prices when sustained translates into stronger steel sales.
Texas has the most rigs by a huge margin at 425. Of the 425, there is currently only one offshore well, the balance are on land. The state with the second highest count is Oklahoma with 124. New Mexico ranks third with 58, North Dakota was next with 44, followed by Louisiana with 39 and Colorado at 29. Nineteen of Louisiana’s wells are off shore of a total of 20 for the country. As a point of reference there were over 100 off shore rigs in operation in 2004, (Figure 2). These six states combine to account for 83.9% of total 857 US wells.
At Gerdau we monitor rig counts along with the price of oil and natural gas since it has a major impact on long product sales to include Special Bar Quality sucker rods for down hole pumping strings to merchant and structural products for rigs and oilfield equipment.