Industry at a glance

Despite expanding tensions in the Middle East, fresh instability in the Red Sea and the war in Ukraine, benchmark crude prices fell again in December, with Brent down 6.4% to $77.63/bbl, while WTI declined 7.5% to average $71.90/bbl. The decline in oil prices comes after Brent fell 8.5% in November ($82.94/bbl), while WTI dipped 4.2% to average $77.69/bbl. 

U.S. natural gas prices declined in December, in spite of the onset of colder winter weather. The commodity at Henry Hub was trading at $2.52/MMBtu in December, compared to $2.71/MMbtu in November. The 12-month running average at HH continued to decline, down to $2.54/MMBtu, documenting the dramatic price reduction since August 2022, when operators were receiving $8.81/MMBtu. 

U.S. rig count. U.S. drilling activity reversed its downward trajectory, with the rig count gaining four in December, up to 623. The reversal comes after a four-rig decline in November (619), an eight rig drop in October (623) and a decline of 16 rigs in in September (631). The overall Texas count was up four rigs to 307, with a four-unit increase reported in District 8A, up to 14. New Mexico suffered a five-rig loss, down to 101.  

Drilled but uncompleted. Lower U.S. drilling activity is starting to cause a reduction in the overall DUC count on a y-o-y basis. In December 2023, there were 4,374 DUCs in the U.S., 203 less than reported in December 2022 (4,577). Over the last several months the build in specific DUC inventories has moderated, with four of the seven regions showing y-o-y declines. The Bakken, Eagle Ford, Permian and Anadarko regions experienced y-o-y changes of -39%, -31%, -22% and -2% in their DUC inventories, respectively. However, large year-over-year gains were reported in gas-dominated regions in Appalachia, where DUCs are up to 768 (+24%); the Haynesville reported 735 (+21%), while the Niobrara count reached 667 (+27%). These three regions account for 50% of the total U.S. DUC inventory.  

International rig count. Drilling activity outside the U.S. improved in November, with the international rig count averaging 1,175, 21 more than the 1,154 units working in October. The increase was due to an eight-rig gain in onshore drilling in Africa (98), a five-rig jump in the Middle East (298) and a three-rig increase in the Asia-Pacific (127) region. 

About the Authors

Craig Fleming

World Oil

Craig Fleming Craig.Fleming@WorldOil.com