Is Rig Count About to Rebound? Scenarios for The Future

Last week Baker Hughes reported that their rig count for active rigs in the United States increased by 23 rigs to 899 active rigs. While this count increased from the prior week, compared to a year ago, the rig count is down by over 1,000 rigs marking one of the worst downturns in the industry history. Our favorite chart shows the rig count for 2000-2009 compared to the rig count of 1973-1983. The similarities are stunning, but even more so if one plots the rig counts indexed to 100 at the start of the respective time periods.

The rig count increase was the first since a four-rig gain experienced during the first week of the second quarter of this year. It barely shows up on the rig count charts. All the rig-count gain last week was onshore as the Gulf of Mexico rig count actually fell by one. Interestingly, the number of directional and horizontal rigs working each increased by 10 over the prior week with the number of vertical rigs up by only three. That would suggest gas shale drilling is continuing at a healthy pace, which could produce a greater problem for the natural gas industry later this year. So does this mid June rig count signal a turning point for the oilfield service industry?

Rigzone