The US oil and natural gas rig count inched up by eight to 1,208 for the week ended November 21, the highest since March 2015, with all additions coming from oil drilling, according to data by S&P Global Platts Analytics.
Last week's oil rigs jumped 13 to a total 960, although gas-oriented rigs fell by four. Last week ended early, owing to the US' Thanksgiving holiday, so Platts published the numbers Monday.
The 1,208 total rigs represents the fifth straight week of gains for the rig count, during which 47 rigs were added to US domestic basins. Nearly half of the additions - 21 rigs - came during the week ended November 14, Platts figures showed.
The Permian Basin in West Texas and southeast New Mexico, the largest oil and gas basin in the country, gained four rigs last week to 494, while the Eagle Ford Shale in South Texas gained five for a total 95.
On the other hand, the Bakken Shale in North Dakota and Montana dropped by three rigs to 64 and the Marcellus Shale, a giant gas reservoir mostly in Pennsylvania and neighboring states, gained one to 56.
Meanwhile, the number of weekly US permits clocked in at 1,202 for the week ended November 21, 185 or 18% above the 1,017 for the previous week.
The number of US rigs has steadily ticked upward since mid-2016 as US oil prices re-stabilized around $50/b, after having fallen below $27/b earlier that year. Oil prices had been at or approaching $100/b for a few years until mid-2014 when they began dropping as a glut of world oil pushed prices lower later that year.
WTI oil prices, which welcomed 2018 above $60/b, stayed in that range and even twirled above $70/b at various times during the year. But in mid-October, prices began falling and are now barely above $50/b.
With oil breakevens for the most popular US plays mostly in the low-to-mid $30s/b and below $2/Mcf for gas plays, it is still economic to keep drilling them. But with the specter of lower oil prices hovering over the industry, especially at a time when producers are formulating 2019 capital budgets, it is unclear just how activity next year will shake out.
At the same time, many producers have predicated their preliminary 2019 spending plans on $50/b oil, so the impact for many may be moot. Oil prices were dropping during Q3 earnings conference calls in late October and early November but at that point, with oil still around $60/b, the issue of potential capex pullbacks was not touched on by most oil executives.
