Drilling rig count jump led by Texas
The oil rebound in West Texas this week led the biggest surge in the drilling rig count since April 2014 — when oil was priced well above $100 a barrel.Nearly half of the active rigs are in the Permian Basin of West Texas. The OPEC market manipulation effort still looks fragile. Many of its members are still losing money at the current price and are trying to make it up in volume. The Saudis and the Russians are still burning through their reserves. I suspect they have a target price of around $60 a barrel.
The amount of drilling activity jumped in Texas as 17 active rigs were added to the Lone Star State, mostly in the busy Permian Basin. The total rig count increase of 27 rigs this week easily surpasses the mid-November increase of 20 rigs in one week, according to data collected by Baker Hughes oilfield services firm.
The hike in drilling activity is the first big change since the Organization of the Oil Exporting Nations agreed at the end of November to scale back oil production. OPEC leaders are meeting Saturday with Russia and other non-OPEC nations to discuss further reductions. The U.S. benchmark for oil was trading above $51 a barrel early Friday afternoon.
Of the 27 rigs added in the U.S., 21 of them are primarily seeking oil and the remaining six are drilling for natural gas.
The Permian Basin added 11 rigs, with three more in South Texas’ Eagle Ford Shale and two more in the Texas Panhandle’s Granite Wash. Colorado also saw a big jump with six rigs activated in the DJ-Niobrara Basin.
The total count is 624 rigs, up from a low of 404 in May, according to Baker Hughes. Of the total, 498 are primarily drilling for oil.