US: Baker-Hughes Rig Count

Fri Feb 09 12:00:00 CST 2018

Actual Previous
N. Amer. Rig Count 1300 1288
U.S. 975 946
Gulf of Mexico 16 16
Canada 325 342

The Baker Hughes North American rig count is up 12 rigs in the February 9 week to 1,300, as a large increase in the U.S. count overshadowed a sizeable decline in Canada. The U.S. rig count is up 29 rigs from last week to 975 and is up 234 rigs from last year at this time. The Canadian count is down 17 rigs from last week to 325 and is down 27 rigs compared to last year.

For the U.S. count, rigs classified as drilling for oil are up 26 rigs at 791 and gas rigs are up 3 at 184. For the Canadian count, oil rigs are down 13 at 221 and gas rigs are down 4 at 70.

WTI crude oil prices above $60 dollars per barrel and at 3 year highs have boosted drilling by North American oil exploration companies, where breakeven costs are mostly below $50 per barrel. But the sharp drop in oil prices this week to below $59 per barrel may moderate new exploration activity in the near term.

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).