Rig Count Update March / April 2015

The global rig count statistics published by Baker Hughes provide a crucial industry activity indicator and some of the most up to date industry statistics available. This is a short report updating international statistics to March 2015 and US statistics to 10 April 2015.

Figure 1 The Middle East OPEC gulf states continue to confound expectations by increasing their rig count and drilling, evidently intent on keeping the oil market over-supplied and the oil price suppressed. Oil rig count for these 4 countries increased 6 to 161 for the month of March. Saudi oil production hit a new record of 10.3 Mbpd in March. Oil Minster Ali Al-Naimi  wants price stability and order to return to the market but on OPEC’s terms.

Figure 2 The international oil rig count peaked at 1080 in July 2014 and has since fallen 104 (10%) to 976 units in March 2015. This is as yet a very muted response to what is a full blown industry crisis. It does take longer for offshore drilling to wind down and it is possible that companies with rigs on contract have simply parked them for the time being.

Figure 3 This chart shows that the combined US oil plus gas rig count is now approaching the lows seen in the wake of the financial crisis in 2008 / 09. The low point then was 876 rigs in June 2009. The total now is 988. But note how oil and gas drilling is now reversed.

Figure 4 Detail of Figure 3. The pause in the decline of the oil rig count seen in recent weeks was reversed last Friday with a drop of 42 rigs for the week. The most recent data for US oil production for February 2015 shows no sign of the LTO production glut abating. Notably the gas rig count ticked up by 3 units this last week to 225 suggesting perhaps that surplus US gas production capacity has now disappeared. But one needs to ask where this leaves US plans to export LNG?

There are a large number of forces pulling on the oil industry that more recently include the bombing of Yemen by Saudi Arabia and allies and the imminent lifting of sanctions on Iran. Iran may add a further 1 million barrels per day to the glut.

Figure 5 Iranian production was never fully curtailed by sanctions and may recover by about 1 million barrels per day with the lifting of sanctions.

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8 Responses to Rig Count Update March / April 2015

  1. David Harrison says:

    Very interesting stats Euan – thanks. How long do you think the lag in the US will be before the falling rig count feeds through to falling production?

    • “Oil production from the fastest-growing U.S. shale plays is set to fall some 45,000 barrels per day to 4.98 million bpd in May from April, the first monthly decline in over four years, projections from the U.S. Energy Information Administration showed on Monday.”


    • Euan Mearns says:

      The simple answer is I don’t know. There was a huge amount of momentum and drilled wells awaiting fracking and hook up that has kept production moving up while rig count went through the floor. And we still have 760 oil rigs drilling in USA. That may not be enough to grow future production but may be enough to balance declines. And so at this level, perhaps production does not begin to fall but simply moves side ways?

      The US EIA are months behind with data reporting and are algorithm as opposed to data driven and published sats are then subject to major future revisions. Hence we may have to wait many months to find out what actually happened while everyone is keen to know what is going to happen. This report shows LTO production falling 1% in May. Lets wait and see what happens.


      • Sam Taylor says:

        North Dakota published their data for February today, showing the second successive month of decline. EIA were about 100kb too high in their estimate, and a few months too late in predicting the inflexion point. The EIA’s algorithms seem not to be all that good in the current rapidly changing environment, which is probably to be expected.

  2. Olav says:

    Looks like Oil Production in USA topped out in Desember.
    EIA is way behind . What they predict will happen in May happened in January.

    North Dakota is best in reporting and easy to follow


    900 wells are waitng for fracking and companies are waiting…hoping for better prices as they wohnt produce at the initially high rates with wellhead prices in the mid 30$ see..


    Texas is more difficult but the link below tells the story…
    2,7 millin barrels down between desember and Januar


    US shale revolution fades, Oil prce halved, Demand goes up.
    I have a belief in the “One of the last” staying power of business as usual so oil prices will go up soon

  3. It is doubtful whether Iran can increase production by 1 mb/d. First, EIA data show the difference between what is produced now and before the sanctions were imposed was only 800 kb/d. And we don’t know what the condition of oil fields is and how much gas is available to maintain reservoir pressure. And if the lifting of sanctions results in economic growth, then demand for oil will increase again. So the net result would be less.

    It is also not clear whether all sanctions will be lifted at once. It is more likely that they will be lifted stage-wise depending on the outcome of inspections. If analysis of nuclear material reveals there are hidden facilities then sanctions will be re-imposed.

    So there are many uncertainties. The war in Yemen adds to the complexity.

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