Baker Hughes Weekly US Land Rig Report - Dec 23 2020

This week, the Baker Hughes Weekly US Land Rig Report showed 329 active rigs, up 1 rig from last week. ArkLaTex and MidCon were both up 2 rigs this week, While the Northeast, DJ and Permian each lost 1 rig. The rig count over the next couple of weeks may look weird due to the holidays. The data should be more accurate in January as everyone returns to work.

Happy Holidays to everyone

Figure 1: Baker Hughes US Land Weekly Rig Count - Dec 23 2020

Table 1: Baker Hughes US Land Rig Count by State - Dec 23 2020

Baker Hughes US Land Weekly Rig Count - Dec 18 2020

In the latest US Land Weekly Rig Count, the US Land Rig Count climbed 5 rigs to finish at 328 active rigs in US Land. The Permian added 6 rigs while the DJ Basin lost 1 rig. All of the Permian additions this week were in New Mexico, likely in response to potential drilling regulation changes on federal lands with the Biden administration

While a frac ban on federal lands will be a problem for the industry, the current oil price and company debt is a far more pressing issue. Most forecasts project that oil prices will stay between $40 and $50 for most of 2021, which is above breakeven for most plays. Unfortunately, running at breakeven doesn't include paying off debt, paying dividends and cash flowing new wells. Unless there is a major change in oil prices, we will see more consolidation and bankruptcies in 2021.

Figure 1: Baker Hughes US land Rig Count - Dec 18 2020

Table 1: US Land Weekly Rig Count by State - Dec 18 2020

The Baker Hughes Weekly Rig Count for the US Land increased 15 rigs this week to finish at 323 active rigs. The Permian added 4 rigs, the Northeast, Powder River and Eagle Ford added 3 rigs each, the MidCon and DJ Basin each added 1 rig. Drilling activity continues to increase toward the end of the year even though completions are lagging.

There have been several different reports of a supply crunch in the future due to an underinvestment in the industry. Internationally, there has been a lack of investment for more than 6 years as the US conventional plays added to the global oil supply. Once we work our way through the oil surplus created by COVID, there will be a lack of lack of investment will show there are limited supplies to respond to demand changes and that should drive oil prices up significantly. While the timeline for such an event is unknown, I would guess that we should it in the next 5 years.

Figure 1: Baker Hughes US Land Rig Count - Dec 11 2020
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Rig Count - Dec 11 2020
(Source: Baker Hughes)

Baker Hughes US Land Weekly Rig Report - Dec 4 2020

This week, the Baker Hughes US Land rig count showed that there were 308 active rigs working in US Land, up 2 from last week. The Permian added 3 rigs and the DJ Basin added 2 rigs. The Northeast, Powder River Basin and California each lost 1 rig.

Oil prices have climbed over the last couple of weeks as the potential for a vaccine has the market beleiving that there will be an increase in oil demand in the next few months. While a vaccine will help things return to "normal" there plenty of supply in the market to moderate prices. The OPEC+ agreeing to increase production quotas in January, oil prices will likely remain in the $40 to $50 range.

Figure 1: Baker Hughes Weekly US Land Rig Count - Dec 4 2020
(Source: Baker Hughes)

Table 1: Baker Hughes Weekly US Land Rig Count - Dec 4 2020
(Source: Baker Hughes)