US: Baker-Hughes Rig Count

Fri Jan 19 12:00:00 CST 2018

Actual Previous
N. Amer. Rig Count 1261 1215
U.S. 936 939
Gulf of Mexico 19 19
Canada 325 276

The Baker Hughes North American rig count is up 46 rigs in the January 19 week to 1,261, pushed higher once again by a surging rebound in the count for Canada following a seasonal weather-related plunge at year end. The U.S. rig count is down 3 rigs from last week to 936 but is up 242 rigs from last year at this time. After adding 102 rigs last week, the Canadian count is up another 49 rigs to 325 but is still down 17 rigs compared to last year.

For the U.S. count, rigs classified as drilling for oil are down 5 at 747 but gas rigs are up 2 to 189. For the Canadian count, oil rigs are up 23 at 208 and gas rigs are up 26 to at 117.

After reaching 3-year highs last week, WTI prices have eased slightly to around $63.25 per barrel, still well above breakeven levels for most North American exploration and development companies and pointing to further increases in drilling activity.

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).