US: Baker-Hughes Rig Count


Fri Nov 10 12:00:00 CST 2017

Actual Previous
N. Amer. Rig Count 1110 1090
U.S. 907 898
Gulf of Mexico 18 18
Canada 203 192

Highlights
The Baker Hughes North American rig count is up 20 rigs in the November 10 week to 1,110. The U.S. rig count is up 9 rigs at 907 and is up 339 rigs from last year at this time. The Canadian count is up 11 rigs from last week to 203 and compared to last year is up 27 rigs.

For the U.S. count, rigs classified as drilling for oil are up 9 rigs at 738 and gas rigs are unchanged at 169. For the Canadian count, oil rigs are up 8 rigs at 108, gas rigs are up 4 rigs at 95, and miscellaneous rigs are down 1 rig at 0.

The large increase follows 5 weeks of declines and indicates that North American exploration and development companies are finally responding to the month-long climb in oil prices that was spurred by a decline in inventories and more recently by political turmoil in Saudi Arabia, the largest oil exporter. With WTI crude oil prices at around $57 per barrel, the highest level in over two years, and breakeven rates for many producers below $45 per barrel, exploration and development activity is likely to heat up if current price levels can be maintained.

Definition
The Baker Hughes North American rig count tracks weekly changes in the number of active operating oil & gas rigs. Used for drilling wellbores for wells that may eventually produce oil or gas, active rigs are essential for the exploration and development of oil and gas fields. Rigs that are not active are not counted. Components in the data are the United States and Canada with a separate count for the Gulf of Mexico (which is a subset of the U.S. total). The count includes only rigs that are significant users of oilfield services and supplies.

Description
Changes in rig counts point to changes in the supply of oil & gas. The higher the rig count, the greater the upward pressure is on oil & gas supply and in turn the greater the downward pressure is on oil & gas prices. The reverse applies when rig counts turn lower, as they did during the oil price collapse of 2014-15 when lower counts contributed to a subsequent decline in domestic oil inventories. Data on the Gulf of Mexico offer indications on production disruptions during the hurricane season (June 1st to November 30th).