Industry at a glance
Despite OPEC’s surprise 1-MMbopd production cut, benchmark crude prices declined in March against a backdrop of weaker-than-expected demand. In the U.S., the profit margin for producing diesel was at its lowest in a year, underscoring weaker demand. Also, fear that steadily rising interest rates will trigger a global economic recession also put downward pressure on crude prices. WTI dropped 4.6%, to average $73.28/bbl in March, while Brent traded at $78.43/bbl, down 5% compared to February. In the U.S., natural gas prices at Henry Hub continued to plummet, down $6.50/MMBtu since August ($8.81/MMBtu), to average just $2.31/MMBtu in March, a decline of 74%.
U.S. rig count. The significant reduction in crude prices caused U.S. drilling to decline slightly with the rig count dropping six units to average 752 in March. The overall Texas count was down two rigs to 370, with the Permian’s District 8 losing eight rigs (200). New Mexico was also on the minus side of the equation, dropping two rigs down to 105. Operators in District 1 (Eagle Ford) also pulled back, reducing activity by two rigs, down to 33.
Drilled but uncompleted. The U.S. DUC count continues to build at an alarming rate, especially in regions dominated by natural gas production. In March 2023, there were 4,676 DUCs in the U.S., 403 more than the 4,273 tallied in March 2022. Large y-o-y gains were reported in the Niobrara region, up to 719 (+127%); Haynesville at 719 (+88%); Appalachia at 706 (+51%); and the Bakken at 608 (+47%). These four regions account for 59% of the total U.S. DUC count. The Permian and Eagle Ford experienced meaningful declines with 761 (-42%) and 413 (-36%) DUCs, respectively, in March.
International rig count. International activity has increased steadily since May 2022, with the exception of a large seasonal decline in December 2022 (1,055). In February 2023, rigs working outside the U.S. averaged 1,163, 36 more than the 1,127 running in January 2023. The increase was attributed mainly to a 22-rig jump in Canada, in addition to a nine-rig increase in the Middle East, which was up to 327.
- U.S. upstream muddles along, with an eye toward 2024 (September 2023)
- Canada's upstream soldiers on despite governmental interference (September 2023)
- The ESG perspective (September 2023)
- Drilling advances (September 2023)
- Industry at a glance (September 2023)
- Embracing the opportunity of ESG to deliver a sustainable future (September 2023)
- Applying ultra-deep LWD resistivity technology successfully in a SAGD operation (May 2019)
- Adoption of wireless intelligent completions advances (May 2019)
- Majors double down as takeaway crunch eases (April 2019)
- What’s new in well logging and formation evaluation (April 2019)
- Qualification of a 20,000-psi subsea BOP: A collaborative approach (February 2019)
- ConocoPhillips’ Greg Leveille sees rapid trajectory of technical advancement continuing (February 2019)