US oil, gas rig count rises by 10 to 414 as producers try to hold output: Enverus

Houston — US oil and gas rigs rose by 10 to 414 in the week ending Dec. 16, rig data provider Enverus said, as operators continue to replace production setbacks earlier in the year from coronavirus-related curtailments.

The week's gains were split 50-50, five apiece between oil plays, where the number of rigs rose to 300, and gas fields, where the number increased to 114.

Among individual basins this week, changes were a hodgepodge, with most basins adding or shedding a rig apiece.

The Eagle Ford Shale of South Texas added two rigs for a total 32. Adding one rig each were the Permian Basin (181 rigs) of West Texas/New Mexico, the Haynesville Shale (46) in East Texas/Northwest Louisiana and the Marcellus Shale (30), mostly in Pennsylvania.

Reducing fleets by a rig apiece on the week were the Bakken Shale (13) of mostly North Dakota, the SCOOP-STACK (13) of Oklahoma, and the Utica Shale (six), mostly in Ohio.

The DJ Basin of Colorado was unchanged on week at nine rigs.

'Above expectations'

"Overall, North American drilling and completions activity is tracking higher than expected," Wells Fargo analyst Christopher Voie said in a Dec. 17 investor note. "The Lower 48 rig count is above expectations, and based on discussions with [four large US drillers], the horizontal rig count is tracking above our models and should plateau through year-end."

For the week ended Dec. 16, the horizontal rig count was 329, down two, according to Enverus data.

While first-half 2021 visibility is limited, "we model 350-360 horizontal rigs by mid-2021, assuming private E&Ps' activity mirrors publics' budget discipline" which is conservative, Voie said.

S&P Global Platts Analytics expects rigs to continue to recover through early 2023.

More good news on a coronavirus vaccine could cause a further uptick from what Evercore analyst James West called "jaw-dropping" declines in North American rig counts this year.

The current total rig count is now just shy of half its early March figure of 838, Enverus data shows, and the North American rig count is poised for to rise, albeit off a low base, West said.

Oil, gas prices strengthening

By early March 2020, the rapid spread of the coronavirus had caused oil prices to begin plummeting to abnormal lows. In the US, WTI prices, which were in the high $40s/b the last few days of February, dropped to the low $20s/b by the end of March and into the teens in April.

Gradually prices recovered, and by late June were around $40/b, where they largely remained until news of approved coronavirus vaccines improved market sentiment. NYMEX WTI was trading just above $49/b midday Dec. 18

Average oil and gas prices for the week ended Dec. 16 climbed, according to Platts Analytics estimates.

WTI averaged $47.16/b, up $1.40; WTI Midland averaged $48.20/b, up $1.59; and Bakken Shale Composite averaged $43.95/b, up $1.29.

For gas, Henry Hub prices averaged $2.59/MMBtu, up 16 cents; while the price averaged an even $2/MMBtu at Dominion South, up 19 cents.