Saturday, September 1, 2012

Haynesville Shale Rig Count: +1 to 24

The Haynesville Shale rig count was up one this week to 24.  Louisiana was down one to 12 and Texas was up two to 12.

Because I'm a little punch drunk with this whole Hurricane Isaac evacuation thing, I'll share with you a transcript of my internal dialogue ("Me" is Id and "Other Me" is Super-Ego):

Me:  WAIT - did you say the Haynesville rig count was UP???
Other Me: Yes, up one.  Big whoop.
Me:  Well, since this is the first time the Haynesville rig count has budged upwards since March 23, 2012 (from 54 to 55), I'd say it's a big whoop.
Other Me:  OK, big whoop, but don't go around thinking this really means something.  Anadarko added a rig in Panola Co, TX and XTO shifted a rig from Louisiana to Texas.  And the Anadarko rig add isn't really a big deal since they were down one last week.  We are still right at the four week rolling average.
Me:  But is still feels like a change in momentum.
Other Me:  Eh, not really.  The trend is still pretty steeply downhill.  Look at the above chart.  It's so steep, I wouldn't ski it.
Me:  Yeah, well...
Other Me:  It's not like we've even reached a plateau.  Right now the only drillers of note are Anadarko (6), EXCO (5), Petrohawk (4) and XTO (4).  Then you've got four companies with one or two rigs.  If a couple of the big players drop a rig or two we'll be below 20.
Me:  OK, OK, can't you just let me enjoy a brief reversal of fortunes?
Other Me:  Sure, whatever, but don't get all optimistic on me.  You're such a bummer when things start going against you after an artificial high.
Me:  What's wrong with you anyway?
Other Me:  Where do I start?  Suffice to say that natural gas prices have really got me down.
Me:  Me too, but you don't see me moping around.
Other Me:  I'm not moping around.  I'm just realistic.  If prices stay below $3/MMBtu for much longer we are going to find out where the real floor for Haynesville rigs is:  ZERO.
Me:  That's not going to happen.
Other Me:  It could at least be in the single digits if things keep going on like this.
Me:  But look at the national rig count.  Since this time last year, gas rigs have dropped by 425 rigs, which is 47%.  That's GOT to impact supply sooner or later.
Other Me:  Sure, that's the conventional wisdom and it will make some impact.  But over that same period, oil rigs are up 33%, or 350 rigs.  The current level of rigs is only 11 off the recent high.  Many oil rigs produce associated gas.  Plus, there are lots of big gas wells out there.  It's hard to gauge the supply side of the equation.
Me:  Whatever, don't be such a glass-half-empty-Gloomy Gus.  Go out and enjoy the weekend.
Other Me:  It's hot outside.
Me:  At least you're not home sitting in an un-air conditioned house.
Other Me:  Don't get me started.

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