Weekly U.S. Oil Rig Count: Shale Is Back - Part III

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Summary

Total U.S. rig count (oil and gas) increased by 16.

Total U.S. oil rig count increased by 13.

The horizontal rig count increased by 14.

The oil rig count outside of the Permian increased by 9.

The natural gas rig count increased by 3.

A lot of activity in shale producing regions along with the usual increase in the Permian. This is the second week in December that shows signs of revival in shale basins. Crude oil prices (NYSEARCA:USO) remained essentially flat during the week.

Source: Finviz.com

Data:

Source: Baker Hughes

* Total U.S. oil rig count increased by 13, with about 2/3 of the rigs located outside of the Permian. Most of the rigs were horizontal rigs.

In total, oil rigs are up by 65% since the bottom in late May 2016. Virtually all of the rigs added have been horizontal.

* Horizontal rigs increased by 14 during the week. We believe all of them are oil rigs.

In total, the horizontal rig count is up by 67.5% since the bottom in late May.

Source: Baker Hughes, Orangutan Capital

After last week's lack of activity outside of the Permian, this week brings several new rigs spread across multiple basins. In addition, the rig count in the Permian continues its steady climb.

* The Permian oil rig count increased by 4. This increase follows an increase of 23 rigs during the previous two weeks.

In total, the rig count in the Permian is up by 98.5% since the bottom in late April/early May. During the month of November alone, the rig count in the Permian was up by 10%, and so far for December, the rig count is up by another 11.5%.

* The shale producing regions registered an increase of 6 new rigs during the week, with no major increases in any particular basin.

* There were two new rigs in the Gulf of Mexico.

* There were three new natural gas rigs added during the week, one of them in the Utica basin. Haynesville remained flat, while the Marcellus shale saw a drop of one rig.

Conclusion:

A lot of activity in the rig count concentrated not only in the Permian but spread out across multiple basins. 2/3 of the rig count increase this week was concentrated in shale producing regions although the Permian continues to be the preferred basin attracting financing. We should see further increases in the rig count in the coming weeks.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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