Oil rigs climb 4 to 375
Gas rigs up 6 at 127
Permian rigs fall 2 to 224
The US oil and gas rig count climbed 10 to 502 in the week ended March 17, Enverus data showed, reaching a fresh 11-month high despite a pullback in Permian drilling activity.
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Register NowThe number of rigs chasing mostly oil was up four week on week to 375, the highest since the week-ended April 15, while the gas-focused rig count was up six to 127, the highest since the week-ended April 8.
The increase puts the total US rig count up 98, or 23%, since the start of 2021, and up 223, or nearly 80%, from its early July nadir.
Rig counts were higher across all of the major named basins outside of the Permian, which shed two rigs leaving a total of 224, and in the Utica shale, where rig counts were flat at 11.
It was the first pullback in Permian drilling since the week ended Feb. 17, when severe freezing winter weather paralyzed oil field operations across most of Texas. Outside of the one-week dip, Permian rig counts have been steadily higher this year, rising 42, or 23%, since the week ended Dec. 30.
Operators added a single rig each in the oil-focused Eagle Ford (37 rigs), SCOOP-STACK (18), Denver-Julesburg (16), and Bakken (15) basins.
On the gas side, Haynesville basin rig counts climbed one to 47, and operators in the Marcellus play added a single rig for a total 33.
Prices were little changed week on week, with oil slightly higher and gas slightly lower.
For oil, WTI averaged $65.28/b for the week ended March 17, up 60 cents; WTI Midland averaged $65.95/b, up 38 cents; and the Bakken Composite averaged $65.56/b, up 4 cents.
For gas, Henry Hub averaged $2.55/MMBtu, down 8 cents on week; and Dominion South averaged $2.07/MMBtu, down 16 cents.
Capital discipline continues
While US drilling activity has closely mirrored a sharp run-up in crude prices since the end of 2020, capital discipline is likely to present headwinds to further increases, analysts said.
"There's no desire to increase activities currently, and even when oil markets balance, response is likely to be muted," Biju Perincheril of SFG Research, said in a March 11 note after conversations with seven of the largest US producers, including ConocoPhillips, Occidental Petroleum and EOG Resources. "If the current price deck holds, companies will have ample flexibility, and we would look for incremental capital return" to shareholders."
Other analysts said reining in capex was the least US producers could do this year, given OPEC's goodwill in restraining production to keep oil prices aloft.
"Energy specialists ... highlight that companies need to stay disciplined to mitigate a negative OPEC+ reaction," Scott Hanold, of RBC Capital Markets, said in a March 11 investor note. "So far so good, but it has been noted that private [E&P companies which account for] 30%-plus of US activity and production, are adding rigs."
Hanold added that "The macro backdrop should remain constructive through year-end, at least. Demand should improve this summer ... and public operator discipline so far should keep a lid on near-term production growth. Likewise, OPEC+ continues to play its part with the continuation of production cuts."
The OPEC+ group at its March 4 meeting unexpectedly decided to roll over the bulk of their production cuts into April, keeping about 8 million b/d of crude production, or roughly 8% of pre-pandemic supply, off the market for another month.
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US oil, gas rig count up 10 on week to 502, despite Permian slowdown: Enverus - S&P Global
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