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.
- The last barrel (February 2024)
- Oil and gas in the Capitals (February 2024)
- What's new in production (February 2024)
- First oil (February 2024)
- E&P outside the U.S. maintains a disciplined pace (February 2024)
- Prices and governmental policies combine to stymie Canadian upstream growth (February 2024)
