U.S. Land Rigcount: Onshore Oil Boom
Insight Onshore - Sector Review
30 pages, 137 exhibits
Link: sendspace.com
Excerpt:
Land rigcount up 11% QTD sequentially.The U.S. onshore rigcount has
risen 11% sequentially to average 1,309 rigs in Q2 through the week ended
May 7 versus 1,181 in Q110 (+127 rigs) according to data tracked by The
Land Rig Newsletter. The rigcount gain has been largely oil-driven (68% of
the increase), with the oil rigcount up 86 rigs in Q2 thus far, or +23%
sequentially, to 459, while gas-focused activity has increased 41 rigs, or
+5%, to 850 (oil is now 35% of total activity vs. 65% for gas). From the May
2009 trough of 717, the onshore rigcount has surged 612 rigs, or +85%, to
1,329. (Note: analysis includes traditional U.S. land rigcount for rigs drilling
wells greater than 5,000 ft).
Permits data through April suggests rigcount/permits gap has
narrowed. The three-month moving average for permits, which is highly
correlated with the rigcount (see Exhibit 1), increased 14.7% sequentially in
April. Our permits to rigcount regression suggests the U.S. rigcount is
slightly ahead of itself as recent permit trends support a rigcount 3.4%, or
48 rigs, below April levels (1,431 rigs vs. 1,479 BHI rigcount in April). While
our permits to rigcount regression (96% R-Squared) continues to suggest
the U.S. rigcount is ahead of itself, robust permit activity in April narrowed
the gap from the previous month, when the regression suggested the
rigcount was 154 rigs, or 11%, ahead of itself.
California and North Dakota strongest so far in Q2. On a geographic
basis, the most significant sequential Q2 rigcount gains to date have been
registered in California (+7 rigs, or +53%, to 19), North Dakota (+19 rigs, or
+26%, to 95), Texas (+60 rigs, or +11%, to 587) and Oklahoma (+8 rigs, or
+7%, to 116). On the flipside, the Alaska rigcount was down by 1 unit
seasonally to 11 rigs (-5%). For more state detail, please see Exhibit 8.
DJ Basin, Uinta and Bakken account for strongest sequential gains,
Haynesville continues to lag. The unconventional shale play rigcount has
risen 39 rigs, or +8%, to 545 in Q2 so far, trailing the 11% increase in the
total U.S. rigcount. The DJ Basin, Uinta and Bakken shale plays have
registered the strongest quarterly gains in activity so far, with the DJ Basin
rigcount climbing by +4 rigs, or +27%, to 21, the Uinta rigcount rising +5 rigs,
or +27%, to 23, and the rigcount in the Bakken up +18 rigs, or +24%, to 93.
On the other hand, activity has stagnated in the Haynesville and Barnett
shale plays. Haynesville activity has declined by 3% since Q1, falling 3 rigs
to 109, while the rigcount in the Barnett rose by just 1 rig, or <1%, to 81. For
more details on activity trends for the unconventional plays, please see
Exhibit 123 through Exhibit 137.
Rigcount gain relatively split between horizontal and vertical drilling.
While horizontal drilling activity has accounted for 65% of the increase in the
total rigcount since the 2009 trough, vertical activity has kept pace so far
into Q2, reflecting increased oil directed activity. Quarter-to-date, horizontal
drilling has risen 66 rigs, or 11%, to 697, while the vertical rigcount is up by
61 rigs, or 11%, to 612. Please see Exhibit 17 for more detail on horizontal
rigcount trends.
Contractor trends. On a quarterly basis, the strongest sequential jumps in
activity have been registered by Bronco (+4 rigs, or +38%, to 16), Union (+7
rigs, or +33%, to 30), Ensign USA (+6 rigs, or +16%, to 44), Patterson-UTI
(+18 rigs, or +15%, to 139) and Oil States’ Capstar segment (+3 rigs, or
+14%, to 26). While NBR’s rigcount is up 15 rigs, or 11%, to 154 QTD
(consistent with the peer group), HP’s rigcount has lagged (+11 rigs, or +9%,
to 142).
Privates and Mid-Cap independents leading QTD improvement in
activity. Quarter to date, the rigcount for Private operators has risen 66 rigs,
or 14%, to 534, with similar strength shown by Mid-Cap Independents,
which have increased activity by 28 rigs, or 13%, to 239 through May 7. The
Majors rigcount has kept pace with the average, up 7 rigs, or +10%, to 76
sequentially, while activity trends for the Superindependents (+7 rigs, or
+8%, to 98) and Large Caps (+29 rigs, or +6%, to 478) have trailed the peer
group. Interestingly, the Utility Company rigcount has fallen by 5 rigs, or
18%, to 22 in Q2 thus far.
E&P trends. As illustrated in Exhibit 5, 30 E&P’s are running 10 or more
rigs, in-line with our update 1 month ago. The biggest percentage increases
on a quarterly basis thus far have been registered by Continental (+5 rigs,
or +39%, to 18), Cimarex (+6 rigs, or +37%, to 20), Pioneer Natural (+5 rigs,
or +31%, to 20, Shell (+3 rigs, or +24%, to 14), and Noble (+2 rigs, or +21%,
to 13). Notable on the downside were Quicksilver (-2 rigs, or -34%, to 3),
Williams (-3 rigs, or -18%, to 14), Forest (-2 rigs, or -17%, to 11), SandRidge
(-2 rigs, or -11%, to 18), and El Paso (-1 rig, or -10%, to 12) Exhibit 4. |
