2013 Forecast: Rig count takes a momentary breather

The U.S. rig count average rose 1.9% last year. This 40-rig increase was less than 2011’s 334-rig increase (up 21.6%), for a number of reasons. Lower gas prices in 2012 meant reduced gas drilling activity and, since many operators spent through their budgets in the first three quarters, there was no rush to push extra capital into drilling, at the end of the year. This loss of activity, while not necessarily indicative of the year’s overall trends, detrimentally affected average rig count. Also, 2012 saw more efficient drilling as individual rigs tended to drill wells slightly more efficiently. This reduced the need for additional rigs without there being a drop in the overall well total.

This year operators are expected to use the time-savings gained through more efficient drilling and rig usage, to drill extra wells. How much of a factor this will be throughout the year remains to be seen.

Average number of rigs and gas/oil drilling split

Texas led the country’s rig growth, bringing an average of 58 extra rigs to the state during 2012. Peaking at 932 rigs in June and dropping to 838 by December, Texas’ count is an illustration of the year’s anticlimactic end. Districts 1 and 8 brought the state most of its rig gains. Other large increases for 2012 include North Dakota, which pushed its average 20 rigs higher and Oklahoma, which was up 16 units.

Annual rig average declined the most in Louisiana, which started with 147 active units in January, and then went to down to 109 in December. Most of this occurred in northern Louisiana, which lost an average 43 rigs, starting with 65 in January and dropping to 22 by December.