Downturn Lingers: Rig Count Down Again, Baker Hughes Says

Rig counts across the U.S. fell again this week, plummeting to levels similar to those seen in April 1999 when the oil and gas sector was experiencing a commodity price downturn.

The latest figures from the Baker Hughes Inc. (NYSE: BHI) weekly rig count show only 443 rigs were pumping in the U.S. this week. Although the count is down seven from last week’s tally, it is down 545 from the 988 rigs that were operating about this time a year ago.

For the week ending April 8, the U.S. oil rig count dropped by eight to 354, while gas rigs inched up by one to 89, according to Baker Hughes. The U.S. offshore rig count stood at 25, down one from last week and down eight year-over-year.

The story was the same in Canada, where the overall rig count dropped by 8 to 41 this week, the report showed. Both oil and gas rigs saw single-digit declines, going to 8 and 33, respectively.

Oil and gas companies have drastically reduced drilling since commodity prices began to tumble in 2014. A global hydrocarbon oversupply, which has outpaced demand, has depressed commodity prices, hitting lush shale operations hard enough for companies to slow drilling and leave wells uncompleted to salvage profits in a sub-$40 per barrel (bbl) oil environment.

Just before 2 p.m. (CST) on April 8, a barrel of West Texas Intermediate crude was $39.50/bbl, up 6% but far from the highs of more than $107/bbl reached in June 2014.

Oil rigs, however, still outnumber gas rigs in the U.S. There were 354 oil rigs operating this week, compared to 89 gas rigs. The opposite is true in Canada where, at 33, gas rigs outnumber the eight oil rigs that were running there this week.

Meanwhile, the mighty Permian Basin lost three rigs this week, settling at 142, compared with 264 about a year ago. Losses were also seen in the Barnett, Haynesville and Williston basins. Only Cana Woodford and Utica saw more rigs in action this week than last week—each up by two rigs.

According to a Reuters report, Cowen & Co. analysts this week estimated the number of active U.S. oil and gas rigs would tumble from an average 559 in first-quarter 2016 to 411 in the second quarter before falling to 401. An increase is expected in the fourth quarter when the financial services firm anticipates the count to rise to 415.

In a separate report released this week, Baker Hughes said the worldwide rig count is also down. The global tally was 1,551 for March, down 210 from the 1,761 counted in February. The March figure is down from 2,557 counted in March 2015, according to the report.

Velda Addison can be reached at vaddison@hartenergy.com.