US rig count posts first increase since December

OREANDA-NEWS. June 29, 2015. The US rig count posted its first increase since December, follwoing 28 straight weeks of declines that pushed the count to a 12-year low.

The count rose by 2 last week to 859, but still remained near the 12-year low of 845 touched on 17 January 2003. The count has plunged 56pc from last year's peak of 1,931 and 53pc lower than end-2014 levels.

The reversal has been driven an increase in the number of rigs drilling for gas, which rose by five to 228. The number of rigs drilling for oil fell by three to 628

The small rise in rigs underlines the resilience of the US shale industry, whose booming output in part triggered the plunge in benchmark oil prices from 2014 highs to near six-year lows early this year. A fall in drilling costs as service providers offered deep discounts to retain share in a shrinking market and a recovery of about 40pc in oil prices are prompting some independent producers to slowly but surely ramp up operations.

WPX Energy was the latest to join companies like Pioneer Natural Resources and ConocoPhillips that plan to raise their production targets. WPX said that its estimated drilling and completion costs in the Williston basin in North Dakota, are now about \\$8mn per well, down by 30pc from the average in 2014.

Lower costs and better estimates of recoverable reserves are giving the company "the opportunity to generate returns in excess of 30pc in today's commodity price environment," chief executive Rick Muncrief said. The company expects to grow crude output by 20pc in 2016.

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Rigs drilling onland fell by 1 to 824, while those on inland water increased by two to seven. Rigs drilling offshore increased by one to 28.

The North American rig count rose by one to 994. The Canadian count fell by one to 135. The US Gulf of Mexico count rose by one to 28.

The number of rigs drilling horizontally fell by eight to 654, while those drilling vertically increased by seven to 107.

By state, Louisiana added six rigs, followed by New Mexico and West Virginia which added one each.

mg/tdf

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