Overall U.S. Rig Count Turns Slightly Negative. Energy Prices Fall
November 14, 2016 ✰ Energy Update ✰
What The Election Means to Oil & Gas Development
The election is over (finally) and the surprise election of Donald Trump is being debated around the world, with all sectors of the global economy scrambling to determine the potential effects of his presidency.
Trump will put more emphasis on expanding U.S. oil and gas production
The oil and gas industry is looking to see Trump’s approach to energy as he has already surrounded himself with strong advocates of traditional energy sources like oil, gas, and coal. It is clear that his presidency will bring in one of the most deregulated eras for oil and gas in recent memory. It is widely expected that major infrastructure projects, including pipelines, will be back in play and there will be expanded drilling on federal lands. Oklahomans have anticipated that Harold Hamm, CEO of Continental Resources would become energy secretary. If appointed, Hamm would be the first U.S. energy secretary drawn directly from the oil and gas industry since the cabinet position was created in 1977.
But the day after Trump pulled off an upset win for the White House, Hamm said he would remain at the company he founded, Continental Resources Inc.
“As excited as I am to see this change come to Washington, D.C., I remain committed to you, our company and the city,” said Hamm in an email to Continental Resources employees. “Our efforts to help President Trump get elected have been about creating a better working environment for the oil industry and Continental Resources, but our focus remains on building this great company.”
Oil and Gas Prices Fall
Demand for oil rigs has been rising in the latter half of this year as crude prices have stabilized in a price range between $40 and $50 per barrel, and producers found confidence with market conditions, but crude futures have erased the gains made since the end of September when OPEC said it would agree to cut oil production to stabilize persistently low prices.
Oil prices fell Friday after OPEC said October output reached another record, casting doubt on whether its plan to limit production is attainable. OPEC reported its output rose to 33.64 million barrels per day (bpd) last month, up 240,000 bpd from September.
Investors remain skeptical that a deal to cut oil output levels will be reached at the upcoming OPEC meeting on Nov. 30, and an oversupply of crude appears as a more likely possibility in the near future.
West Texas Intermediate (WTI) crude oil for December delivery traded down on Friday to settle at $43.41, while January Brent crude prices closed at $44.75 a barrel.
Natural gas futures for delivery in December on the New York Mercantile Exchange closed the week at $2.63 per MMBtu. Natural gas prices fell further in the past two weeks than any other since December 2014 as unseasonably warm weather and soft demand have prices down nearly 22% in just a month.
RIG COUNT – US Total -1, Now at 568
✰ Oil Rigs + 2 – Natural Gas Rigs -2 ✰
☞For an interactive experience, jump over to the Oklahoma Index and visit our proprietary dashboard containing a compilation of this weeks rig data from Baker Hughes.
Last week in a turbulent market clouded by fighting among OPEC members, an ever-increasing supply of oil and framed by the then-undecided US Presidential election, we gained 9 oil rigs. Shrouded by falling prices this week and surprising election results that have captured world attention, oil rigs showed a slight increase with a +2 and we had a decrease of –2 rigs, drilling for natural gas.
Among major oil- and gas-producing states, Texas gained six rigs and Ohio was up by one. Alaska and North Dakota each declined by two. New Mexico, Oklahoma, Pennsylvania and Utah each lost one. Arkansas, California, Colorado, Kansas, Louisiana, West Virginia, and Wyoming were unchanged.
Few changes in county rig count totals left the Permian Basin unchanged at 218 this week, according to data from Baker Hughes.
Midland County still leads the country’s most-active basin at 32 rigs, which fell one this week, but Reeves County continued its steady climb after one new rig bumped its count to 28. Midland County has the most activity in the Midland Basin, while Reeves tops the Delaware Basin.
Other double-digit counties in the Permian were Martin (22); Lea, New Mexico. (18); Loving (18); Eddy, New Mexico (12); Howard (12), Culberson (11) and Upton (10)
Oklahoma Rig Count Slows – Falls Back One to 75
✰73 HZ Rigs (-1 this week) and 2 Vertical Rigs (same as last week)
The rig count in Oklahoma showed little movement over the last week, with only 3 counties recording a change. Grady and Canadian Countieslost one rig each while the hottest county in the state, Blaine County, gained one rig.
This week we take a look at the rig count of the top seven counties reporting in Oklahoma over 2016. These counties are located in the STACK and SCOOP plays. Of interest is the dropoff in rigs in Canadian County, from a high of 11 earlier in the year down to the current rig count of 2. Blaine County is currently at its peak, with 18 rigs reporting drilling. Dewey, Kingfisher, and Grady Counties have remained steady and are only slightly off of their recent highs. Woodward County is on the rise and is matching its 2016 peak with a current rig count of 3.
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