As energy companies continue to take advantage of recovered crude prices, spending and rig counts continue to rise. As drilling efficiency continues to improve, publicly traded drillers are wanting to see daily rig counts to avoid uptime misrepresentations.
O&G Rig Count Up Five Consecutive Weeks
Last week, U.S. rig counts rose to 799, the highest since early 2015 and the first time in eight months that rig counts rose five weeks in a row.
On Friday, February 23, there were 978 active O&G rigs, surpassing the average counts for both 2017 and 2016, and up by 376 active rigs from February 23, 2017.
Simmons & Co. analysts forecast an average 1,015 oil and natural gas rig count for 2018, estimating an average 1,128 for 2019.
Drilling Efficiency Begs Daily Rig Count
With rig counts rising fast, drilling companies are now asking to see daily rig counts.
“Our drillers are becoming so efficient,” Alan Gilmer, co-founder and executive chair of Drillinginfo told Hart Energy. “In the old days, you couldn’t drill any kind of well in less than a week. Today, you see people being able to spud drill in far less than a week, moving around and hitting lots of locations.”
SOURCE: Drillinginfo DI Rig Analytics
Drillinginfo tracks over 95% of the U.S. rig fleet on a daily basis, offering near real-time rig count updates using GPS and other tech tools. “Weekly sampling just didn’t suffice. We really needed to see daily sampling to understand how good operators were achieving success.”
“We were encouraged by the drilling companies to use daily counts,” said Gilmer. “The publicly traded guys were tired of analysts overestimating their uptime. We were able to provide a lot more transparency and detail, which would give people better data.”
Higher Prices Boost E&P Spending
E&P companies are spending almost twice as much as they did two years ago. Apache plans to spend $2.1 billion of its $3 billion budget on Permian drilling, with around $500 million on Alpine High pipelines. Cowen & Co. reports 81% of their tracked E&P companies indicating spending increases of 9% in 2017, about 53% more than they planned on spending in 2016.
Crude futures traded at around $63 per barrel on Feb. 23, up from the $43.47 average for 2016 and $50.85 average for 2017.