This article
was first published by Seeking Alpha on March 19, 2015
The number of
drilling rigs across the U.S. continues to decline, which was evident in the
latest data released by Baker Hughes (NYSE:BHI). The total number of oil and
gas rigs in the U.S has fallen to 1,125 for the week ending Friday, down from
more than 1,800 a year earlier, after the oil rig count fell for the fourteenth
consecutive week to 866 -- its lowest level in approximately four years.
However, so
far, the low rig count has not made any major impact on U.S. oil production
growth due to two main reasons. Firstly, a large portion of the rigs that
initially came off were directional/vertical rigs rather than the horizontal
rigs. The latter produce significantly greater volumes of hydrocarbons in a day
than the former. Secondly, the process of the drop in the number of rigs and
its impact on U.S. oil production is a lengthy one which usually takes a couple
of months, not days.
The number of
rigs will likely continue to head lower in the near future. Oppenheimer's
analyst James Schumm wrote in a recent report emailed to me that the U.S. rig
count will drop by 28% in the first quarter as compared to the final quarter of
the last year. That's bad news for oilfield services companies Schlumberger
(NYSE:SLB), Halliburton (NYSE:HAL) and Baker Hughes whose woes have been
compounded by .… read full article at Seeking Alpha.
