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US oil rigs this week rose by a whopping 15 to 859. Baker Hughes said on Friday. with two-thirds of the increase coming from the Permian Basin as the domestic activity factory ground higher amid sustained oil prices around $70 b.
The Permian Basin. located in West Texas and southeastern New Mexico. was up by 10 oil rigs to 477.
The spikes followed a stalled rig count at 844 the previous week. although there were movements between basins. according to Baker Hughes` weekly North American rig count numbers. which uses raw figures supplied by S&.P Global Platts RigData.
Currently the total US oil rig count is the highest it has been since March 2015. when it was dropping fast in response to oil prices that were then half their $100 b-plus levels six months earlier.
The recent US oil rig peak of 1.609 was in October 2014. at a time oil prices had fallen to the mid-$80s b. The peak for oil rigs in the Permian. the most active US drilling arena. was 562 oil rigs. which occurred in both October and November 2014.
And although both US and Permian rigs are ticking up in response to robust activity and WTI oil prices that have largely remained over $60 b this year and recently have crept into the $70s b. many are doubtful that US rigs will return to the 1.600 level anytime soon. since both well drilling and completions have become far more efficient since that time.
Well designs are allowing upstream operators to do more with fewer rigs. and still extract more oil per well. And even more recently. three years of oil prices that averaged around $48 b from 2015 to 2017 and pale shareholder dividends during that period prompted companies to return more of their cash to investors and hold the line on annual production growth to the mid-to-high single digits to the low double-digits.
Even as Permian drilling ballooned this week. virtually all the basins showed some rig movements. The Eagle Ford Shale in South Texas. which has seen renewed operator interest this year. was up by two oil rigs to 67. Meanwhile. the Granite Wash play in Texas and Oklahoma lost an oil rig to 13. and the Others category lost three oil rigs leaving 137.
`Others` is Baker Hughes` classification for rigs that are not working in any of the 14 large named basins it tracks.
That left seven of the regions gaining one oil rig: the Williston Basin in North Dakota and Montana. to 57. the Mississippian play in Oklahoma and Kansas. to five. DJ Basin in Colorado to 25. the Cana Woodford in Oklahoma to 73. and the Ardmore Woodford to three.
In addition. two largely gas-prone basins which did not have any oil rigs working for awhile both gained an oil rig — the Haynesville Shale. in East Texas and Northwest Louisiana. and the Barnett Shale in North Texas.
