Friday, December 23, 2016

Baker Hughes Rig Counts: Increases in Oil (+13) and Gas (+3)

Oil rig counts continued to rise this week (ended Dec 23), gaining 13 rigs from 510 to 523, with most of those new rigs in Texas and Oklahoma.  It seems to confirm that oil in the mid $50's is profitable for many E&P's.  With the declines in domestic production reversed, it suggests that both rig counts and production will continue to climb in this price environment.

The gas rig count is telling a similar story, up 3 this week to 129, more than 50% above the lows in May:

And Canada is beginning the holiday lull in activity that is seasonally typical there, with oil rigs down 10 and gas down 3.  Gas rig counts remain surprisingly high, and would support strong production growth in 2017 if the fleet keeps at it.