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Friday, February 01, 2019

Oil: Another large drop in rig counts

by Calculated Risk on 2/01/2019 06:36:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on February 1, 2019:

• Oil rig counts imploded, -15 to 847

• The news on the horizontal oil rig count was not as bad, -7 to 759

• The Permian lost 2, ‘Other US’ was whacked with -7, but all other named plays were flat

• We now have enough data to begin to sketch out this mini-cycle (assuming the historical relationship of rigs to oil prices holds)
• Having fallen by 27 in the last four weeks, the model suggests the horizontal oil rig count will fall by additional 65 or so rigs before bottoming in April. So pencil in 100 total horizontal oil rigs lost in Q1.

• Assuming oil prices crawl back up to $60 WTI – and both the futures curve and recent oil prices trends suggest that is possible – rig counts should stabilize or begin to recover in Q2.
Oil Rig CountClick on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.