US: Baker-Hughes Rig Count

Fri Dec 08 12:00:00 CST 2017

Actual Previous
N. Amer. Rig Count 1150 1151
U.S. 931 929
Gulf of Mexico 20 20
Canada 219 222

The Baker Hughes North American rig count is down 1 rig in the December 8 week to 1,150, breaking a string of four consecutive increases in the prior weeks as exploration and development activity accelerated in response to climbing oil prices. The U.S. rig count is up 2 rigs at 931 and is up 307 rigs from last year at this time. The Canadian count is down 3 rigs from last week to 219 and compared to last year is down 11 rigs.

For the U.S. count, rigs classified as drilling for oil are up 2 rigs to 751 while gas rigs remain unchanged at 180. For the Canadian count, oil rigs are up 1 at 112 but gas rigs are down 4 at 107.

The week's rig count drop mimics a similar minor retreat in oil prices this week, with WTI futures trading around $57.20 per barrel, down about $1 from the prior week. But with breakeven rates for many U.S. shale oil exploration and development companies 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).