The nation's rig count was less this week than it was a year ago
For the first time since early 2015, the number of working rigs in the U.S. is lower this week than it was the same time the year before.
According to a weekly report issued a day early by Baker Hughes on Thursday, the number of working rigs was 1,012, compared to 1,013 the same week in 2018.
The last time the country saw the same thing happen was in January 2015, when the average number of running rigs nationally was 1,683, compared to 1,769 in January of the previous year, U.S. Energy Information Administration data shows.
Oklahoma economists said Thursday part of the change can be attributed to an apparent stand-pat attitude boards and executive teams are holding well into the year after seeing West Texas Intermediate crude oil prices drop from nearly $75 a barrel in mid-2018 to just more than $45 a barrel at the end of the year.
They also said companies remain pressured by investors to return profits, rather than to boost reserves and production, adding that they also are getting more daily production per rig, plus still are contending with sizeable backlogs of wells that have been drilled but not yet completed.
"Rig count by itself is not a complete picture anymore," said .
"I think we are getting a whole lot more activity out of a single drilling rig than we used to" when it comes to the number of wells each rig is drilling.
Plus, he observed that ongoing consolidation activities within the industry also might be having an impact on activity, after Chevron announced a week ago it would acquire Anadarko Petroleum in a stock and cash transaction package valued at $33 billion.
"That’s a recognition there are some good deals out there, and the mid-level companies out there are quite excited, wondering who is next," he said.
Russell Evans, executive director of Oklahoma City University’s Steven C. Agee Economic Research and Policy Institute, said Thursday it also appears to him boards and top executives within the state’s oil and gas industry companies are avoiding making snap decisions on operational matters.
"We always kind of think about economic activity responding to oil prices. When oil prices are high, it constrains economic activities, and that leads to a fall in oil prices and Oklahoma enters into whatever soft economic activity ensues, late," Evans said.
"This feels a little different to me. Oil prices aren’t bad, but it still feels like companies are not rushing to amend their drilling budgets for 2019 because oil prices are better than what had been forecasted.
"If anything, companies are coming out and saying explicitly (and implicitly) they have no intent on increasing production. Some of it may be some anticipation of some national economic weakness that still is developing, and we will keep an eye on that."
Evans said he expects to see rig counts continue to decline in Oklahoma and that lower drilling activity likely will translate into lower production rates that in turn could dent Oklahoma’s revenue collections through gross production, income and sales taxes during the latter half of 2019.
"I hope I’m wrong — what I am saying isn’t a consensus opinion — it is just my read of things right now," he said.
In Oklahoma, the weekly working rig count crossed the same threshold leading to lower current numbers than the previous year on Feb. 15.
As for this week, Oklahoma’s working rig count was 102, off two from a week earlier. A year ago, 127 rigs were drilling in the Sooner State.
In the Cana Woodward basin, 48 rigs were drilling this week, unchanged from a week ago.
The most active fields this week, Baker Hughes said, were the Permian in west Texas and southeast New Mexico at 463, the south Texas Eagle Ford at 77, the Marcellus Shale at 62, the Williston at 61 and the Haynesville at 54.