The total number of operating rigs in the US the week ending May 5th was 877, 703 oil and 173 gas. On a month on month (m/m) basis oil rig count is was up 4.6%, gas was up 4.8%.
West Texas Intermediate (WTI), crude oil had a strong run-up in price from $47.34 per barrel on March 21st to $53.11 on April 11th prompting renewed enthusiasm in the oil field. The party did not last however as pricing for WTI rolled back to $45.87 as of mid-day today. Natural gas prices were at $2.08 MMBTU a year ago, peaked briefly at $3.80 on December 9th then dipped to $2.59 on February 22nd. Since then, gas prices have trended upward reaching $3.23 mid-day today.
Figure 1 shows the Baker Hughes US Rotary Rig Counts for oil and gas equipment in the US through May 5th. US oil rig count trending sharply higher since the recent low of 316 units on May 27th 2016. The strong upward rise in oil rig count will likely slowdown in the coming weeks, unless the recent oil price slide reverses soon. The gas rig count bottomed out at 81 on August 26th and has more than doubled since then. The growth trajectory has been much slower for gas wells than it has been for oil. This is function of price, which in supply: demand driven.
There are three classifications for drilling trajectory: Vertical, horizontal and directional, (Figure 2). This week 83.7% of the rigs were horizontal, 7.6% were directional and 8.7% were vertical.
In Canada, there were 82 active rigs, 27 oil and 55 gas. Activity was sharply down m/m as oil rigs declined by 35.7% and gas rigs were off 38.9%. Looked at on a y/y basis the picture was much brighter, oil rigs +146% and gas rigs + 129%. Regionally almost all the wells are in either Alberta (65) or British Columbia (14). There was only one offshore rig off the coast of Newfoundland.
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 downhole pumping strings to merchant and structural products for rigs and oilfield equipment.