Rig Count Attrition Slows After Four Months Of Decline

As doubt grew about a possible production freeze bringing relief to an oversupplied market, the latest Baker Hughes (NYSE: BHI) rig count report showed North American drillers operated four fewer rigs this week.

For the week ending April 15, the North American count dropped to 480, compared to the 1,034 rigs that were pumping about a year ago.

The report capped off a week that saw modest oil price gains since February shaken a bit April 15 with WTI crude down about 2.8% to $40.36 a barrel on the New York Mercantile Exchange, a bankruptcy filing from one of the largest U.S. shallow-water drillers and more pontificating from analysts on what could happen when some of the world’s top oil producers meet April 17 in Doha to discuss freezing production to improve market conditions.

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In the meantime, rig counts continued to slide.

With the exception of the Gulf of Mexico and the Barnett Shale, the rig count was either down or unchanged in all major basins from the previous week.

In the U.S., drillers cut three rigs—all oil—to land at 440 rigs total.

The U.S. oil rig count dropped to 351, a level not seen since November 2009, while the gas rig count was unchanged at 89, Baker Hughes reported.

However, Canadian companies dropped three gas rigs and added two oil rigs, bringing its gas and oil rig weekly totals to 30 and 10, respectively.

The rig count grew by three offshore to 27, down only five rigs from a year ago, according to Baker Hughes.

U.S. horizontal oil land rigs decreased by 6 to 269 led by the Woodford, partially offset by one additional rig in the Permian Basin and in other basins held steady. The horizontal oil rig count has declined for 16 consecutive weeks but for the third week decreases came in single digits, signaling that the decline has slowed, said J. David Anderson, an analyst with Barclays.

Pioneer Natural Resources’ (NYSE: PXD) CEO Scott Sheffield said this week he believes the rig count will bottom in the next few weeks roughly 340 rigs, Barclays said.

Lower 48 basin counts are still dominated by the Permian and Williston basins and Bakken production region, with the Permian increasing its dominance of a dwindling army of rigs.