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Alternative shale indicators continue to exhibit resilience, despite a lower U.S. rig count, Macquarie strategists stated in an oil and gas report sent to Rigzone on November 3, outlining that the trend was similar to last month.
“U.S. oil production reached 13.1 million barrels per day in August, oilfield labor activity rose to a new cyclical peak in September, and Permian permitting activity remains robust through October,” the strategists noted in the report.
“While the divergence in these indicators relative to the rig count may be explained by a variety of factors (lag/lead times, supply chain catch-ups, efficiency/productivity gains, mere statistical noise, etc.), they nevertheless offer a far more constructive U.S. supply picture than indicated by high-level rig counts,” they added.
“That said, improving efficiency/productivity has been a notable and recurrent theme in Q3 earnings season for the U.S. upstream. While we remain highly attuned to this potential, we continue to believe it’s a bit early to strongly assert the case for a sharp re-acceleration in shale productivity,” the strategists went on to state.
“In any event, we believe ongoing resilience in tight oil remains underappreciated and anticipate another year of meaningful shale growth in 2024 given current commodity prices,” the Macquarie strategists continued.
In the report, the strategists highlighted that the horizontal land rig count in the U.S. was down nine this week, “with the Permian (-4) leading the decline among oil/liquids plays”. The strategists also noted in the report that initial October permits for horizontal wells in the Permian/EFS/Bakken were 739/235/74 vs an initial 884/187/55 in September, “that were revised to 768/142/56”.
Baker Hughes’ latest rotary rig count, which was released on November 3, shows that the total U.S. rig count stands at 618, comprising 594 land rigs, 21 offshore rigs, and three inland water rigs. Of the total U.S. rig count figure, 496 are categorized as oil rigs, 118 are categorized as gas rigs, and four are categorized as miscellaneous rigs, the count outlined.
The total number of directional rigs in the country stands at 54, the total number of horizontal rigs stands at 549, and the total number of vertical rigs stands at 15, according to the count, which showed that Texas is the state with the most rigs, at 304. New Mexico ranks second with 104 rigs, Louisiana ranks third with 41 rigs, Oklahoma ranks fourth with 36 rigs, and North Dakota ranks fifth with 29 rigs, the count revealed.
The total U.S. rig count has dropped by 152 compared to year ago figures, with land rigs reducing by 160, offshore rigs increasing by seven, and inland water rigs increasing by one, Baker Hughes outlined. Week on week, the U.S. land rig count dropped by six and the offshore rig count dropped by three, while the inland water rig count increased by two, the count showed.
Year on year, the U.S. oil rig count has dropped by 117, its gas rig count has dropped by 37, and its miscellaneous rig count has increased by two, according to Baker Hughes, which revealed that, week on week, the oil rig count decreased by eight, while the gas rig count increased by one and the miscellaneous rig count stayed flat.
The directional rig count in the U.S. was up one week on week and 11 year on year, while the horizontal rig count was down nine week on week and 156 year on year, and the vertical rig count was up one rig week on week and down seven year on year, according to Baker Hughes.
Texas’ rig count was down seven week on week and 65 year on year, New Mexico’s count was up four week on week and down two year on year, and Louisiana’s rig count was down one week on week and down 18 year on year, Baker Hughes’ latest rotary rig count showed.
In a separate report sent to Rigzone on October 9, Macquarie strategists outlined that the U.S. rig count remained weak as other indicators continued to “show resilience”.
“EIA data placed U.S. oil production at a robust 13.0 million barrels per day in July, defying a recurring narrative around constrained U.S. supply,” the strategists said in that report.
“Yet, doubts around a shale response to high prices have re-emerged as the rig count has fallen. While the rig count has fallen further than we expected and a series of acquisitions of private cos. by public peers represents an ongoing headwind, other indicators offer a more resilient picture,” they added.
“Notably, BLS data released today shows oilfield labor activity remaining near peak in August. Likewise, permitting data in the Permian for both August and September has been strong,” they continued.
To contact the author, email andreas.exarheas@rigzone.com
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