The total number of operating rigs in the U.S. the week ending December 5th was 929, 749 oil and 180 gas. In percentage terms, on a month on month, (m/m) basis, oil rigs were up 2.7% and gas rigs increased 6.5%. In numerical terms, the total decline over the month was 31 rigs. On a year on year, (y/y) comparison, rigs were up +57.0% for oil and +51.3% for gas. The combined figure was +55.6% or +332 rigs.

rigcount-fig1Figure 1 shows the Baker Hughes U.S. Rotary Rig Counts for oil and gas equipment in the U.S. from 2012 to present. Despite the recent upward momentum, the rig count is still well down from the lofty 1,930 level enjoyed in September 2014.

Figure 2rigcount-fig2 presents the North American rig count by basin. The Permian basin in West Texas is by far the largest producer, (It reaches from just south of Lubbock, to just south of Midland and Odessa, extending westward into the southeastern part of New Mexico). On December 3rd the Permian basin contained 397 oil rigs and zero gas rigs.  At less than one fifth the output of the Permian are the Cana Woodford, (72 oil, 0 gas) and Eagle Ford, (60 oil and 7 gas) in the number two and number three spots.  Eagle Ford is also in Texas while the Cana Woodford is mostly in Oklahoma but does stretch into the northeastern part of the panhandle in Texas.

Texas had 452 rigs, plus two off-shore rigs, (48.9% of the total), followed by Oklahoma with 122, (13.1%), New Mexico with 70, (7.5%), Louisiana had 44 on-land and 18 off-shore, (6.7%). North Dakota’s count was 47, (5.1%). These five states together account for 81.3% of the nation’s rig count.

Prices are moving up. Referencing Bloomberg Energy, West Texas Intermediate (WTI) crude oil closed at $57.62 today, close to its high for the year. Its range over the past 52 weeks has been between $43.39 and $59.05 per barrel. WTI crude has been trending higher since its recent low of $42.53 on June 21st. Brent crude oil closed at $62.64 per barrel today, close to its 52 week high of $64.41. Its 52 week range was $46.15 to $64.41 per barrel, Brent crude has been trending higher since its recent low of $45.22 on June 21st. Natural gas closed below $3 per MMBtu today, ($2.93 per MMBtu). It has been trading over the past 52 weeks between $2.87 and $3.83 per MMBtu.

Canadian rotary rig count totaled 222 on December 5th, 111 oil rigs and 111 natural gas rigs. These figures were up 11.0% m/m for oil and up 22.0% m/m for gas, +15.6% on a combined basis. On a y/y comparison, oil rigs were up 11.0%, while gas rigs increased by 13.3% for a combined increase of 11.0%. The province of Alberta had by far the greatest amount of rigs with 162, (72.3%), followed by Saskatchewan with 32, (12.0%) and British Columbia also with 23, (12.0%). These three provinces account for 97.7% of the total rigs in Canada.

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.