The US oil & gas drilling rig count has plummeted in the past year and this week 24 July the rig count gained 21 rigs. Last week the rig count fell 7 rigs. The two prior weeks the rig count increased.
To get weekly rig statistics google “Baker Hughes North America rig count.” This April is the first time in 25 years the US oil & gas drilling rig count has fallen substantially below 1,000 rigs currently with over 1,000 rigs idle.
At the current $48 bb the price of crude oil in the past year has fallen as much as 50%. Many expensive shale oil wells have become uneconomical at current crude oil prices. Much of the US crude oil increased production comes from shale oil formations which require expensive horizontal drilling.
Shale oil formations often must be fracked several times; consequently, production costs are high. Here are the following drilling rigs statistics as of 24 July 2015:
US year ago rigs idle
876 1,883 -1,007
1,076 2,278 -1,202
11 42 -31
374 886 -512
69 178 -109
107 204 -97
76 119 -43
The drop in Texas drilling rigs is dramatic in terms of substantial jobs lost, service equipment loss, and decreased oil royalty income. The result is some well drilling costs have dropped 35% to 40%.
The key issue when will the rig market have a major uplift? Where is the bottom of the rig market? In the past four weeks the rig market has increased three times and last week decreased one time. Are we closer to the bottom??