Canadian drilling activity dropped sharply this week, according to Baker Hughes’ (ticker: BHI) weekly rig count for March 24, 2017. Canada lost 91 rigs to end the week at 185, down from 276 active rigs last week. This is the largest single-week drop seen in Canada since 2014, when 135 rigs came offline at the end of December.
This drop is most likely an expected seasonal adjustment, as the number of active rigs in Canada typically drops sharply in March.
The Canadian rig count is in general much more variable than the U.S. rig count. Since 1998, the earliest Canadian data published by Baker Hughes, Canada has added or lost more than 100 rigs in a single week 64 times. The number of active rigs has doubled in a single week twice, once in 2016 and once in 2013. By contrast, while the U.S. rig count has always been higher than the Canadian count, U.S. rigs have never added or lost 100 in a single week.
U.S. rigs increase by 20
U.S. rigs are up by 20 to end the week at 809 active rigs. Land rigs are up by 22, the same as last week, which was slightly offset by inland waters and offshore counts each losing one. Twenty one of the added rigs in the U.S. are targeting oil formations, bringing the total oil rigs to 652. Gas lost two to end the week at 155 active rigs, and one “miscellaneous” rig came online meaning two such rigs are active this week.
Texas and Oklahoma received most rigs this week, adding eight and seven, respectively. Three rigs came online in New Mexico. One rig was added in Alaska, California, North Dakota, Pennsylvania, and West Virginia. Wyoming and Louisiana saw rig counts decrease, losing one and two rigs respectively.
Seven rigs were added in the Permian this week, reversing the decline the basin experienced last week. 315 rigs are currently active in the Permian, up 168 from this time last year. The Cana Woodford, Eagle Ford and Marcellus each added two rigs this week. One rig came online in the Williston, Mississippian, Granite Wash, and Barnett basins. Notably, no major basins saw active rigs decrease this week.
The Federal Reserve Bank of Dallas released its Regional Economic Update this week, where it commented on the state of the oil and gas industry in the state.
The Dallas Fed report said, “While the Texas rig count began rising in mid-2016, the increases have been largely confined to the Permian Basin,” not news to anyone following the U.S. shale plays.
Eagle Ford rig counts have increased monthly since November, with the largest jump occurring in February.
Dallas Fed energy industry contacts indicate that “growing oil production in the U.S. and heightened uncertainty cloud the outlook for oil prices. Additionally, even as the rig count rises in Texas, oil patch employment likely will not return to pre-bust levels because of higher operational efficiency and increased automation.”
