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January Oil and Gas Off to a Sluggish Start

by Elizabeth Alford on February 1, 2016

Rig counts across the country continued to slide downward hitting a low of 619 at the week ending January 29th.

Related: Schlumberger Cuts 10,000 More Jobs in Q4

Natural gas rigs fell by 13 to 121 and rigs targeting oil dropped another 12, to 498.. The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) Horizontal drilling continues to dominate the activity in all regions of the country:

  • 487 Horizontal Rigs
  • 74 Vertical Rigs
  • 58 Directional Rigs

This week’s decline marks the 22nd consecutive week that there has been no positive motion for this important oil and gas indicator, according to Baker Hughes. Rig counts have dropped drastically this year as oil and gas producers have sidelined rigs to cut costs while waiting for crude prices to rebound.

Texas leads the nation in running rigs, though that count has also dropped significantly this year. As of Friday there were only 281 rigs running across the Lone Star State, down from 414 one year ago. Activity in the Permian basin and Eagle Ford Shale regions are providing most of the production and account for more than 90% of the total drilling in Texas.

The situation in the oil and gas industry continued to deteriorate throughout January with crude prices fluctuated wildly and dipping below $30 at one point. There was also news of at least one bankruptcy and another 14,000 job cuts from Halliburton and Schlumberger. A huge wildcard that is sure to affect things in the coming months is what the influx of Iranian oil mean to our industry. One analyst warns that “… unless something changes, the oil market could drown in oversupply.”

Read more about the rig counts at BakerHughes.com

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