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US Rig Count Craters To Lowest Since August 2010
With oil prices down another 6% this week (despite Saudi leadership uncertainty and ECB QE), widespread layoffs announced in Shale states, and despite Lew's comments that he doesn't see US oil production declining, it is perhaps no surprise that the US rig count cratered further to its lowest level since August 2010. The US rig count is now down over 15% from the highs, with its biggest 10-week drop since May 2009 (and down 8% YoY). The pace of collapse in the rig count has now accelerated for 7 weeks in a row, and judging by lagged oil prices, there is a lot more room to drop yet. The oil rig count standalone is now down 7% YoY - its biggest drop sicne Nov 2009. As T.Boone Pickens so rightly noted, watch the US rig count (and suggested it will need to drop 500 rigs or more before any stability returns).
- *U.S. OIL RIG COUNT -49 TO 1,317, BAKER HUGHES SAYS
- US HORIZONTAL DRILLING RIGS DOWN 24 AT 1,229 IN WEEK TO JANUARY 23 -- BAKER HUGHES
The rig count continues to collapse... as 4-month lagged oil prices lead the way - just as they did before...
- *ENERGY RIGS IN TEXAS'S EAGLE FORD FORMATION DOWN FOUR TO 181
- *MISSISSIPPIAN LOSES FIVE RIGS TO 63: BAKER HUGHES
- *ENERGY RIGS IN PERMIAN BASIN SLIDE BY 6 TO 481: BAKER HUGHES
- *ENERGY RIGS IN WILLISTON BASIN FALL BY 12 TO 153: BAKER HUGHES
- *ENERGY RIGS IN MARCELLUS FORMATION GAINS ONE TO 76
Notice that the rig count always undershoots before prices are able to reverse.
* * *
Not "unambiguosly good"!
Houston (and CO, ND, PA, WV) we have a problem...
But don't worry - Treasury Secretary Lew says the oil companies can handle it...
- *LEW SAYS U.S. CRUDE PRODUCERS CAN HANDLE DECLINE IN OIL PRICES
As credit risk hovers near record highs for the sector
Charts: Bloomberg
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<== Saudis are laughing their asses off
<== Goldman Sachs is laughing their asses off
Little OT but noticed something weird about some oil companies - some of them had sold Puts on Oil in addition to buying hedges for downside price protection. While hedges might help them, I dont see the point of selling puts alongwith those. Unless of course they were smart enough to cover them before the downdraft.
i think the saudis are trying to drive everyone else out of business.
GS is just a bunch of a-holes.
Well, other than the fact that their production has already peaked...
Shit, they can't even get any positive gains from their increased rig count.
This is classic malinvestment and simply does not require conspiracy theories. Sure, Saudis want to eliminate competition, but they sure as fuck don't have the means to accomplish it. Demand isn't there, yet supply is so leveraged, nearly all producers have no choice but to pump like mad.
This is but a dog-eat-dog scenario where everyone tries to survive longer than their neighbor until some semblance of balance returns.
I'd probably add Louisiana and Mississippi to the jobless totals,
All the services come out of LA but they are never included for some reason. The majority work in the services in US positions. Offshore is a multinat mix, so very few americans offshore.
There is no skimming if there are no big moves in the "market". Overcorrections only make the bonus that much sweeter for the paper-pushers.
Looks like another 400 will be closing over the next 6 weeks!
$40's are getting boring. I am ready for the $30's and $20's for crude.
GS: "I scored a 2-million dollar bonus! I feel bad about my clients losing all their money, though!"
Great news 4 u! Now you can use the proceeds to fill up a few TI-class super tankers and play Capt. Joe Hazelwood slalom with the icebergs until this shit blows over.
In Houston atm, I hear a slurping sound..
fuck you lew secretary of debt issuance what a fooking looooser
soon the oil rigs will equal the amount of rig'd markets
Wake me up when its under 1000 and QE4 begins
Lots of jobs going down the drain, unemployment rate up, potential cover for no rate increase.
Hmm...a controlled demolition of the U.S. economy, a la WTC 7.
"Nobody could have predicted the plunge in oil price would lead to a drastic plunge in the world/domestic economy."
Pull it.
The comittee will adjust its expectations to the data which becomes available and will pursue the correct macroprudential path when that time comes.
Layoffs and bankruptcies are picking up steam.
Craigslist will be getting more bidness as the "toys" start getting sold off.
Why does Jack Lew care? He doesn't even know what a corn cob looks like.
You think he cares about some State's finances? Bwhahahahahaha.
"Go bankrupt New Jersey." That's his ethos.
Of course Jackass LLew is clueless, just like the rest of them. They are completely insulated from all reality.
He's clueless from the Governor of New Jersey's reality that's fer sure.
By design. Otherwise someone might try to hold them accountable.
Boats are for fisherman and people who like to watch their money go down the drain.
The 2 happiest days of a person's life is the day they buy a boat and the day they sell it. I suppose that could also be applied to antidepressants.
"Notice that the rig count always undershoots before prices are able to reverse."
Wow,
A lot more pain
Have a HUGE merger between Baker Hughes and Halliburton.
Sounds like I should sell both!
I find the terms "undershoot/overshoot" to be a misnomer, as it implies something goes down/up further than necessary. In reality though, it is necessary, as that final capitulation creates the market signal that the true bottom/top is in.
It's not like you can magically recognize the "correct" level in advance. Especially when there is still price adjustment that needs to occur in order for an investment to present an acceptable level of risk to return. Without the "undershoot/overshoot" event, capital has no incentive to flow, as it is still not needed.
Jobs aren't important, everyone will collect unemployment forever and food stamps until infinity and beyond while the banks print print print moar and moar free monies!
The Real Unemployment Rate: In 20% Of American Families, Everyone Is Unemployed -http://www.zerohedge.com/news/2014-04-29/real-unemployment-rate-20-ameri...
There Has Never Been A Greater Portion Of America Living On Food Stamps -http://www.zerohedge.com/news/2014-12-07/there-has-never-been-greater-po...
To infinit-EBT... and beyond!
of course the companies can handle a downturn.
The laid off employees... not so much.
I hope they put most of $200k salaries in the bank.
"..The laid off employees... not so much.
I hope they put most of $200k salaries in the bank..."
Righteous muggins for bail-ins...
Then all the slaves will all be equal
Yeah I bet those shale workers were the ones buying all of the new trucks,watch the repo's explode.
How about some articles on the other countries that are struggling with this lower price (Venezuela, Russia, Iran, etc.)? To concentrate soley on the US, when so many other countries are losing at this price per barrel, might make one think this is agenda-driven reporting.
Many countries have problem with budget. They don't have problem with mass layoffs
Shale oil, tar sands, offshore oil.
Shit, think about Venezuela!
TP and stuff is pretty available nowadays.
Unless you live in a country where a Marxist value is followed and no market is allowed.
You got a whole country of women with little TP and Kotex.
Prepare to die, motherfuckers!
***
No, Fernando, no sex tonight!"
"But I found three rolls of TP!"
"Here is some golden nectar on your face, Fermnando! Go out and score a bigger supply!"
Hard to choose...
T. Boone Pickens was right.
Interesting...no news about Maduro or Venezuela in the MSM.
He must have scored.
When you own a drilling company, and you are leveraged with Junk Bonds and the well head price means every barrel coming out marks up another loss of dollars, you might want to walk away and wait this low price cycle out. But you can't because "you are leveraged with Junk Bonds". The interest is due, so you pump and pray for a major spike in oil prices. You and every other high cost producer on the margines, you all pump like mad to service debt while praying for the oil price to spike. Basic economic of supply and demand are driving nails into their coffins, as supply grows as demand has fallen off. The oil markets find a lack of bidders and prices fall even more.
Until the Saudis squeeze all of the great American Shale Oil Miracle out of the markets. You can only pump at a loss so long, and then all the leveraged producers must default. The default tears through the financially engineered banks system and all the hedges finally dry up, or can't pay up.
Oil is boom and bust, that is why all the shills pushing you into chasing yield in the Junk Bond market have exposed you to the bust in oil. Banks too lent heavily to producers, chasing yield in the newly energy independent America. The low cost producers can last out North Sea oil, Canadian Tar Sands, American Oil Frackers, and the opening round of Arctic drillers. Saudi want their market share back, they want to be the American's oil supplier with all the political leverage that entails.
Simple enough, and Washiington DC is on board with the Saudis, allowing the Fracking Miracle to die, in the vaguie hope of collapsing the Russian economy, Iranian economy and Venezuela. The Zionist Neocons in Washington, will happily destroy a million good jobs in America, to bag three enemies of Zionism.
Must default? Sorry Jack, but you're confusing this shit-show with a functional economy that contains risk.
Producer debt will be securitized and sold to Yellen Inc. long before TPTB allow domestic production to blow-up (in the name of national security, reliance on foreign oil, etc). Sure there will be some that are allowed to fail, but that just creates the activiation energy for the next QE 'mandate.'
This is ALL about the banks, remember?
New 5' LoD crude 45.47. Fix this Dragh Queen:
http://www.investing.com/commodities/crude-oil-advanced-chart
Moral of this is to not buy drillers right now - either land or sea. They have debt tied up in equipment and will be getting lower rates, contract cancellations, etc. That several OPEC countries, Russia, Iran, and the US have said they are keeping production the same -- or increasing production -- actually means that oil services companies will still be supporting those current wells and current production. There are seleced bargains out there now, as long as we don't have BOTH low prices AND decreased production.
Texas doesn't deserve this.
Actually, we do.
Jack Lew(ser) will be the Savior to his alma mater TBTF Whore Citibank as Hankie Paulsen was to his TBTF Whore Goldman. What an amazing coincidence (yeah right) Check here for a reasonable story
http://investmentresearchdynamics.com/is-the-brown-stuff-about-to-hit-the-fan/
The drillers out there that have the ability to shut down are for the Debt Slaves it can sure be tougher but at these prices got to think even covering much of any costs are negligible for long....Good thing here in Southern Kansas we have gone a couple of weeks without an earthquake as the frakers are shutting down. Expect a big acceleration in the next month for shutdown especially if prices continue to fall. When you are bleeding out and can't even cover variable cost SHIT HAPPENS.