The total number of operating rigs in the U.S. the week as of September 27th was 713 oil and 146 gas (totaling 860). In percentage terms, on a month on month, (m/m) basis, oil rigs were down 3.9% and gas down 9.9%. On a year on year, (y/y) comparison, rigs were down 17.4% for oil and down 22.8% for gas. The combined figure for YoY was -18.4% or -194 rigs.
Figure 1 shows the Baker Hughes U.S. Rotary Rig Counts for oil and gas equipment in the U.S. from 2012 to present. Oil rigs rose have dropped below 1,000 rigs starting in April of 2019 and landing at 860 this week. Gas rigs bottomed-out at 81 in August 2016 then rose steadily topping out at 172 this week.
For the week ending September 27th, Texas was operating 418 rigs (49.0% of the total), Oklahoma with 66, (8.0%), New Mexico with 109, (13.0%). Louisiana had 34 on-land and 22 off-shore, (7%). North Dakota’s count was 53, (6%). These five states together account for 83% of the nation’s rig count.
The OPEC has a current agreement for production cuts of 1.2 million barrels a day expires at the end of March, and the group may come under pressure to extend or deepen those curbs if the outlook for oil demand worsens.
Investors should know that domestic drillers may not continue to add rigs in the oil patches since the crude pricing scenario is weak and U.S. drillers have a conservative capital spending plan for this year. Despite the bearish landscape, it would be wise for investors to keep an eye on Permian drillers which are producing more crude with the deployment of lesser rigs.
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.