A key upstream indicator for oil and gas exploration activity released new figures demonstrating the continued pain felt by those on the ground floor of the American energy industry. Texas saw 70 percent of the continental U.S.’s stacking drilling rigs for the week ending May 13 as Iran continues to shatter daily production forecasts.
Houston-based Baker Hughes International’s (NYSE: BHI) Weekly Rig Count offered fresh perspective on the decline of North American oil and natural gas exploration. Nationally, 10 rigs were sent to their yards for stacking amid a continued global supply glut this week, seven of which were operating in Texas. As of now, only 406 oil and gas rigs are in use in the United States, down 482 from the same time last year. Texas holds 45 percent of all American rigs, 181 total as of this week. A year ago, maintained 373. Only one natural gas rig went into the field this week in the country.
Job losses per stacked rig may not appear to be much on face value, but economic impacts are felt directly and not with each loss. Based on shift changes per 24 hour period, up to two dozen individuals may work on a single rig, yet more than 120 works indirectly, performing services to keep the operation running midstream and further. When accounting for lost sales by surrounding motels, restaurants and grocers, whole communities face hardships.
Reduced rig counts have translated into widespread applications for Chapter 11 bankruptcy protection among exploration companies. Earlier in May, Breitbart Texas reported on the largest of such companies to file, LINN Energy, working to restructure more than $8 billion in debt. Since January 2015, roughly 130 firms across North America have met a similar fate – more than 50 of which are based in the Lone Star State. Bloomberg News figures that at least four more firms, each holding at least $8 billion in debt, face bankruptcy in the near future. A modest rally to $45 per barrel has not offered the relief that only the sunniest of optimists had hoped for.
As domestic producers continue to flounder, a reinvigorated Iran is already shattering daily output rates – well ahead of western market analysts’ expectations of an infrastructure rebuilding period after the Obama Nuclear Deal began to take effect. Iranian crude exports to Europe and Asia set new records in April, yielding 2.35 million barrels per day, up 660,000 daily compared to March. Current output from the Islamic regime now bests the wells in the Eagle Ford and Bakken Shale formations combined, according to the Houston Chronicle. There remain some questions over how much of the oil brought to market is freshly extracted versus stockpiled for years. Regardless, Iran’s stock within the Organisation of Petroleum Exporting Countries is rising in the aftermath of the nuclear agreement.
Rig hands and oil patch communities alike in western Texas have reason to hold out some hope throughout the Permian Basin. A previous Breitbart Texas report noted where Chevron Corporation (NYSE: CVX) announced in April its intention to shift extraction assets to the region, tripling output by 2020.
“We believe markets will improve, and we’ll be well positioned when they do,” Chevron Chairman and CEO John Watson said in a release.
Logan Churchwell is a founding member of the Breitbart Texas team. You can follow him on Twitter @LCChurchwell.