Baker Hughes US Land Weekly Rig Report - June 25 2021

This week the Baker Hughes US Land Rig Report was down 2 rigs to finish at 454 active rigs. The Permian and the MidCon each lost 1 rig while the other basins remained flat. 

In a recent Rystad Energy webinar, they discussed the rig count required to maintain and grow US oil production. Based on their research, the efficiency gains throughout the industry has significantly lowered the horizontal rig count required to maintain the current US Oil production. Their data shows that between 320 and 330 horizontal rigs should be enough to maintain US oil production between 11.0 and 11.5 million BOPD. Their estimate of the current US Land horizontal rig count is 325 rigs, just enough to maintain flat oil production. Additional rig increases in oil regions should result in increased US Oil production.

Figure 1: Baker Hughes US Land Weekly Rig Count - June 25 2021
(Source: Baker Hughes)

Table 1: Baker Hughes Weekly US Land Rig Count by State - June 25 2021
(Source: Baker Hughes)

Baker Hughes US Land Weekly Rig Count - June 18 2021

This week, the Baker Hughes US Land Weekly Rig count was up 9 rigs to finish at 456 active rigs. The DJ Basin added 3 rigs while the Permian, Bakken, West Coast and Powder River Basin each added 1 rig. 

Both oil and gas prices continue to climb, with oil averaging above $70 last week and gas averaging above $3. The last time both oil and gas were above these benchmarks was November 2018. Historically, these commodity prices would spur a rapid increase in drilling in the US. While we see an increase in rig activity, the response is depressed compared to the past as operators focus on fixing their balance sheets rather growing production. We will likely see record cash flows from operators at the end of the year due to higher commodity prices. If prices remain at this level through 2021, we should expect increased activity in 2022 as well.

Figure 1: Baker Hughes US Land Weekly Rig Count - June 18 2021
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Rig Count by State - June 18 2021
(Source: Baker Hughes)

Baker Hughes US Land Weekly Rig Count - June 11 2021

This week, the Baker Hughes Weekly US Land rig count increase 5 rigs this week to 447 active rigs. The Permian increased 4 rigs, the Powder River Basin added 3 rigs and the ArkLaTex region increased by 1 rig. The Northeast lost 2 rigs this week and Indiana lost 1 rig.

Figure 1: Baker Hughes US Land Weekly Rig Count - June 11 2021
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Weekly Rig Count by State - June 11 2021
(Source: Baker Hughes)

Baker Hughes Weekly US Land Rig Count - June 4 2021

This week, the Baker Hughes US Land Rig Count was flat week on week, to finish at 442 active rigs. The Permian lost 1 rig and the ArkLaTex added 1 rig. 

Oil prices continue to climb, reaching their highest level since the summer of 2018. In the summer of 2018, oil prices were near $70 and the rig count was between 1100 and 1200 rigs. US oil production grew rapidly during this time, which is part of the reason oil prices dropped toward the end of 2018 and into 2019. In 2018, US Daily oil production was near 10.9 million BOPD and grew to 12.9 million BOPD. The US has maintained 10.9 million BOPD in 2021 due to completion of DUCs rather than drilling wells. With the current low rig count and depletion of DUCs, US oil production will decline without a change in rig count.

Figure 1:Baker Hughes Weekly US Land Rig Count - June 4 2021
(Source: Baker Hughes)

Table 1: Baker Hughes US Land Weekly Rig Count - June 4 2021
(Source: Baker Hughes)

Figure 2: US Oil Production - June 4 2021
(Source: EIA)