U.S. Land Rigcount: Onshore Oil Boom
■ Land rigcount up 11% QTD sequentially. The U.S. onshore rigcount has
risen 11% sequentially to average 1,309 rigs in Q2 through the week ended
May 7 versus 1,181 in Q110 (+127 rigs) according to data tracked by The
Land Rig Newsletter. The rigcount gain has been largely oil-driven (68% of
the increase), with the oil rigcount up 86 rigs in Q2 thus far, or +23%
sequentially, to 459, while gas-focused activity has increased 41 rigs, or
+5%, to 850 (oil is now 35% of total activity vs. 65% for gas). From the May
2009 trough of 717, the onshore rigcount has surged 612 rigs, or +85%, to
1,329. (Note: analysis includes traditional U.S. land rigcount for rigs drilling
wells greater than 5,000 ft).
■ Permits data through April suggests rigcount/permits gap has
narrowed. The three-month moving average for permits, which is highly
correlated with the rigcount (see Exhibit 1), increased 14.7% sequentially in
April. Our permits to rigcount regression suggests the U.S. rigcount is
slightly ahead of itself as recent permit trends support a rigcount 3.4%, or
48 rigs, below April levels (1,431 rigs vs. 1,479 BHI rigcount in April). While
our permits to rigcount regression (96% R-Squared) continues to suggest
the U.S. rigcount is ahead of itself, robust permit activity in April narrowed
the gap from the previous month, when the regression suggested the
rigcount was 154 rigs, or 11%, ahead of itself.
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