US: Baker-Hughes Rig Count

Wed Nov 22 12:00:00 CST 2017

Actual Previous
N. Amer. Rig Count 1138 1123
U.S. 923 915
Gulf of Mexico 22 21
Canada 215 208

The Baker Hughes North American rig count is up 15 rigs in the November 24 week to 1,138. The U.S. rig count is up 8 rigs at 923 and is up 330 rigs from last year at this time. The Canadian count is up 7 rigs from last week to 215 and compared to last year is up 41 rigs.

For the U.S. count, rigs classified as drilling for oil are up 9 rigs to 747 and while gas rigs are down 1 at 176. For the Canadian count, oil rigs are down 2 at 107 but gas rigs are up 9 at 108.

The third consecutive weekly increase after a 5-week long decline indicates that North American exploration and development companies are responding to the recent climb in oil prices to the highest levels in over 2 years, with WTI reaching $58 per barrel. Since breakeven rates for many U.S. shale oil exploration and development companies are below $45 per barrel, activity is likely to heat up further if current price levels are maintained.

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.

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).