Thursday, April 1, 2010

Gas Price Down, Rig Count Up

The national rig count increased by 21 this week to reach 1,465, which is 67.5% above the rig count trough about eight months ago.  There were 13 new oil rigs and eight new gas rigs.  By type, the greatest increase was in vertical rigs (+16), followed by horizontal rigs (+10), while there was a net five decrease in directional rigs.

In the Haynesville Shale region of N. LA and E. TX, inclusive of other formations, the count increased by ten rigs with four new rigs in Louisiana (total now 142) and six new rigs in Texas (total now 75, a 9% increase). 

Although daily metrics are seldom useful, it seems very counterintuitive that the spot price of natural gas drops 5% (likely on unpleasant supply news) today while the natural gas rig count increases by 5% in N. LA and E. TX.  It is frightening that producers are increasing rig counts in the teeth of fairly steep price decreases for this time of year.  Either they know something we don't or they have to do some serious drilling to retain leases in a terrible price environment.
I am going to work on the detailed rig counts for this week and last week tomorrow. 

1 comment:

Anonymous said...

Just keep in mind that much of 2010 US gas production has been hedged at significantly higher prices than current Nymex.

Les B