US rig count below 800, first in current downturn

 OREANDA-NEWS. October 12, 2015.The US drilling rig count dipped below 800 for the first time in the current market downturn, in its seventh straight week of declines.

The total fell by 14 to 795 this week, oil field services provider Baker Hughes said. That is the weakest since the 776 seen in May 2002.

A prolonged weakness in the crude market that's lasted a year is forcing producers to make even deeper cuts to their capital expenditure (capex) by pulling back drilling plans. In the latest example of producers hunkering down, Canadian independent Encana announced selling its Denver Julesburg (DJ) basin assets in Colorado for \\$900mn to lower debt and shore up its balance sheet.

The sale is part of a plan to focus operations "on our four most strategic assets" in the Permian and the Eagle Ford in Texas, Duvernay in western Canada and Montney in Alberta, Canada, said chief executive Doug Suttles.

The US rig count had recovered in end-August and early September, from a previous trough of 857, in part driven by a recovery in prices in the second quarter. But those gains have all been wiped out as the market witnessed a double dip. It had risen to 885 on 21 August, at par with the highest since 22 May. The latest count shows the number dropping by 90 since then.

The count is now down by 59pc from last year's peak of 1,931 and 57pc lower than end-2014 levels. The number of rigs drilling for oil fell by nine to 605. Those drilling for gas fell by six to 189.

The total drilling on land fell by 16 to 760, while the inland waters count held unchanged at three. The number of rigs drilling offshore rose by two to 32.

The total North American count dropped by 13 to 975. The Canadian count rose by one to 180. The US Gulf of Mexico number rose by two to 31. The number of rigs drilling horizontally fell by 11 to 598, while the tally of those drilling vertically declined by three to 114.

By state, Oklahoma lost the most, at six, followed by Texas, which lost four. By basin, the Permian in Texas lost the most, at 10.