Week Ending May 1: US Rig Count Is the Lowest since June 2009 (Part 5 of 10)
(Continued from Part 4)
Gas rig count decreases
In the US, there were 222 natural gas rigs operating in the week ending May 1, 2015—three fewer than the previous week. Among the major resource shales, the main reductions occurred in the Haynesville and Marcellus shales—the rig counts declined by two each.
The fall in gas rig count was partially offset by the higher “Other Basins” rig category, where the natural gas rig count increased by four last week. The rigs in “Other Basins” are those in smaller basins or rigs that don’t fall within a specific geographic basin.
In the week to April 24, the natural gas rig count increased by eight.
Falling natural gas rigs in operation suggest how natural gas producers like Ultra Petroleum (UPL), CONSOL Energy (CNX), EQT (EQT), and Encana (ECA) are lowering their drilling activity. This could mean a slowdown in production growth or even a production decline. CONSOL Energy accounts for 0.7% of the Energy Select Sector SPDR ETF (XLE).
Natural gas rig counts have been on a downward trend for about three years. The gas-targeted rig count seemed to stabilize over the past six months. It showed eight increases in that period. However, any hope of a reversal from a downtrend was dashed by a decrease of 97 natural gas rigs in the past 13 weeks.
One-year gas rig counts are down
The number of active natural gas rigs decreased throughout the last 12 months. A year ago, there were 323 natural gas rigs in operation. Currently, there are 222 rigs. That’s a decrease of 101 rigs, or ~31%. In comparison, the rig count dropped by 31 for the week ending May 2, 2014—down ~10% from the year before.
Natural gas rigs in major US shales
In the past year, most of the decline in the natural gas rig count occurred in the Haynesville and Marcellus shales. The number of gas rigs decreased by 21 and 17, respectively. In the past year, the Eagle Ford Shale added ten rigs to its natural gas rig total—the most of any shale play in the US.
Continue to Part 6
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