The total number of oil and natural gas rigs operating in the United States rose by 11 to 522 in the week ended September 30, according to Baker Hughes. That follows on last week’s increase of 5 rigs in operation.
The bulk of the pick up came in oil rigs where the count rose by 7 to 425 rigs. That’s the highest level since February when the total reached 439. But it’s still down by 189 rigs from a year ago. The count of oil rigs in operation has now climbed in 13 out of the last 14 weeks.
Natural gas activity didn’t pick up as much with the gas rig count climbing by four to 96.
U.S. exploration and production companies have put 107 oil and gas rigs back into operation since late May. That comes after these companies took 300 rigs out of operation in the first half of the year on top of 1,100 in 2015.
The increase in activity remains confined to a small number of basins where production is profitable with oil at $45 or below. Industry analysts see oil prices of $50 to $55 a barrel as required to accelerate the upturn. And, they say, exploration and production companies have to be convinced that once having unit $50-$55 a barrel oil prices will stay at that level.
Which is why it’s so critical for drilling services and equipment companies that the “agreement” announced by OPEC this week to reduce production turn into a real deal with country by country quotas at OPEC’s November 30 meeting. OPEC is projecting an end-of-the-year price of $52 a barrel based on an agreement to reduce production
The picture for offshore drillers remains bleak with the offshore rig count up just 2 from last week to 22. That’s eight fewer rigs than at this time last year.