US Rig Count at Lowest Level Since 2016: Baker Hughes

The US rig count fell by 62 rigs in the week ended April 9, to 602 from 664 the previous week, the lowest level since December 2016, Baker Hughes said in its closely-watched weekly report. It was released a day ahead of the usual April 10 date owing to the Good Friday holiday.

Another six were idled in Canada, bringing the total North American count down to 637 from 705 in the week ended April 3. A year ago, nearly 1,100 rigs were working in Canada and the US.

Gas drilling has been more resilient than oil-directed activity, the report shows: the number of active US gas rigs fell by just four this week, to 96 from 100 last week. Prior to the World Health Organization declaring the global Covid-19 pandemic in early March, 110 rigs were drilling for gas in the US.

The Permian basin took the brunt of the weekly decline, as US shale oil producers racked 35 rigs on the week, dropping the active count to 316 from 351, the fourth straight week that drilling activity has declined. In the week ended March 13 – just as Saudi Arabia and Russia were launching their price war – 418 rigs were working in the Permian.

The falling active rig count – especially in high-decline basins like the Permian where continuous drilling is needed to maintain production levels – has contributed to a forecast 500,000 b/d decline in average US oil production this year, to 11.8mn b/d, the US Energy Information Administration (EIA) said in its latest Short Term Energy Outlook. And production could fall by another 700,000 b/d in 2021, the EIA said.