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US Rig Count Collapse Accelerates, Production Stays High
The worldwide rig count ended January at 3,309, down 261 from December but it is the US and Canada that is dominating that collapse. Following last week's all-time record absolute drop of 94 rigs (over 7%, most since APR09), the oil rig count dropped for the 9th week in a row (down another 83 to 1140 rigs - down 27% in last 9 weeks) as it tracks the 4-mo lagged oil price perfectly. The Permian basin saw the biggest cut in rig count. This is the lowest oil rig count since Dec 2011 (down 19.5% YoY) and lowest total rig count in the US since March 2010 - down 25% in the last 9 weeks). Hopes of production cuts are simply wrong as the last 4 times that rig counts have dropped, no production cuts have occurred.
- *U.S. TOTAL RIG COUNT -87 TO 1,456, BAKER HUGHES SAYS
- *U.S. OIL RIG COUNT -83 TO 1,140, BAKER HUGHES SAYS
Breakdown:
- *ENERGY RIGS IN PERMIAN BASIN DROP 37 TO 417: BAKER HUGHES
- *ENERGY RIGS IN WILLISTON BASIN FALL 11 TO 137: BAKER HUGHES
- *ENERGY RIGS IN TEXAS'S EAGLE FORD DOWN 10 TO 168: BAKER HUGHES
- *ENERGY RIGS IN MARCELLUS FORMATION DROP 4 TO 71: BAKER HUGHES
West Virgina has seen its rig count collapse almost 50% from the peak.. and Pennsylvania is actually higher!
Rig count continues to crater...
Heading into the rig count data, WTI Crude was pushing higher (on Greek downgrade news? lol) and is slumping post...
And do not expect production to slow any time soon..
Charts: Bloomberg
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If i see good, production start peaking.
It seems like it's a vicious cycle: Keep production high to pay off creditors and you also keep prices low which makes extraction even more unprofitable. Guess someone should have run the numbers earlier, but this is what happens when there's "free money" handed out to well-connected people.
coUrtesy of the fed monetary policies, and the rest of the WORLDS cb stimulators. all brought fwd to create the roller coaster ride that fucks over middle class even MOAR. FUCKING COCK SUCKING BASTARTDS...next is the bankers forclosing, then loaning on the same assets to the survivors of this fucked up mess. had enuf? someone has to loose it out their and know where to direct their anger...no fucking ha~~~~
I opined earlier int he week that we would see as a result of this the north american industry have a seizure, mainly US shale oil and canadian tar sands, we'd see production go up and cres, THEN go down, Then the price can go back up.
Then the US and Saudis can high five about not being able to do shit about Russia.
Yeah, they're not going to shut down current drilling projects unless they have no choice and they're not going to cap wells that have already been drilled. Once a well is drilled, a large portion of the costs have already been sunk. Once it is producing, it is income, regardless of whether it produces enough oil to pay off all of the sunk costs. On top of that, the rigs are going to go away in the most expensive to produce areas first. But, at some point, we'll find that there is a relationship, and production will go down, or prices will go back up beforehand. There are several ways this could play out. Producers could start defaulting on their debts when their protection runs out, and that could throw a wrench into things before production would take a big hit. Things could degrade to the point where few wells are being drilled, and those nasty YoY decline rates will eventually catch up. One thing is certain: If prices don't go back up, this will take many months to play out.
You are mostly correct, but don't assume that those drilled wells will all be completed right away. I personally know of three wells in the Baken that are drilled - but the operator can't secure funding to complete them. And yes, some of the small operators have been operating things that close...
Of course these operators now become prime pickings for the larger players to take over...
You mean the wells are drilled, but havent been fracked yet? Regardless, running out of funding to finish a well before it is producing would count as not having a choice when it comes to stopping the development of a well.
Like any REAL metric matters in the least. Only perceptions that feed the gambler's need matter....that and the agenda of the world's destroyers.
I opined earlier in the week that we would see as a result of this the north american industry have a seizure, mainly US shale oil and canadian tar sands, we'd see production go up and crest, THEN go down, Then the price can go back up. Then the US and Saudis can high five about not being able to do shit about Russia.
I think it is prudent to observe the liquidity of the smaller less funded companies trying to stave off this insult. They will not be able to cope with these losses, there assets will become consumed, and those fucking manipulative Saudi fucks will once again move the game into a full scale death match.
Fuck those people. Stop giving them what they want. If you starve them of the hookers then they will realize they have 1/2" cocks.
Arm Yourselves.
"rigged" count in Wall Street is still climbing
Paging T. Boone Pickens
LOL!!
Global oil production running on all cylinders with low global demand.
At the same time we have green bullish candlesticks on Wall street and The City Of London with rising crude prices.
The "recovery story" must be intact doesn´t matter how absurd it looks.
This could be an episode from Monty Python Flying Circus.
We need a better measure here. What is the total number of operating oil wells in the US? If that is continuing to rise or remain the same then production will keep on rising, especially if new fracking oil wells are coming online and beginning extraction.
I think it is after one year that oil production will at last decrease -- fracking has high depletion rates -- and then crater within three years. So oil at $50 or less for at least another year.
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-wellcountus
Don't mislead here. Rigs do affect production. First, production increases at a slower rate. Then production will fall...by the end of the year if you look at monthly production.
Exhibit A: https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
Thanks. What allowed the number of barrels per well to jump back up to levels last seen in the 1950s after droppping to a nadir in the 1990s?
Fracking + cheap money + investors seeking return in a ZIRP world....try to keep up.
odd, because the BLS definitely used some rigging on the employment report today.
Different "rigs", same methodology.
But until the shale/ fracking companies goes "tits up" they must produce on full cylinders in order to pay there bills to the banks and suppliers even though they are producing at a loss.
This will keep the oversupply going.
Because you know each and every shale company's breakeven point, right? Hint: some places can make money at $51 or less, some places can't.
underfunded operators: guessing they are pulling cash out as fast as possible b/4 going belly up. hope they fuck over banks/wall street but good. take the cash and blow the rigs up. fuck with the blowoff preventer while everybody off for a break...just thinking out loud.
The rigs may have shut down, but according to the BLS, the workers are still working (perhaps as bartenders down the street?).
1) New ones not coming on.
2) Less productive/efficient ones being shut off.
Production can still run hot for a while.
When will we start to see banks in trouble due to oil derivatives?
Must be some drill companies having trouble paying loans that was taken on att + 100 dollar crude?
So what you're saying, and what the charts are showing, is that there's a lag... and seeing as how true investors are forward thinkers, now IS a good time to invest? I always knew Zero was a bull in manbearpig clothing. Afterall, who else better to emulate than the DoomandGloom® Goracle??
So you are saying there are still "true" investors? I thought they were all gamblers, looking to pick up a game anywhere they can find it. There is a high in winning at gambling that is not unlike any other addiction. It is a high that one will never get from actually working for it, yet will NEVER have the same satisfaction as actual earning or accomplishment. One is sustainable and one is not.
If guaranteed production cuts from the US doesn't push oil prices higher (guaranteed given these rig numbers), promised cuts from OPEC won't either. Still more evidence that Saudi Arabia has almost nothing to do with the low oil price.
440,000 jobs in November
What would I do without ZH stating the obvious? Of course there is a time lag between a rig drilling a new well and that well’s first production. Of course production will still rise as new wells drilled 6 months ago or more when rig counts were higher finally come online and add new production to the total. Tell me something I don’t know.
I open mouth kissed a horse once.
Which end?
Oil production in the US will begin to plateau no later than August of 2015. Then we'll see a gradual decline for about 1 - 2 years. Then it will faaaaallllll.
Sooooo, that means better unemployment numbers?
BTMFD...investing has never been so simple....
Oil is transitory in the economy, right Bernanke?
If you're surprised by energy's up and downs you do not know your history
Energy Company’s Consolidate…….Oil Price Cut Working
They will be back by summer.
Financed by whom? Even if oil spikes, no one is going to loan money on this
My guess is that some of the majors like COP et. al. will restart a lot of rigs, but I'm in your camp...I'm not seeing that the count will ever go back to the glory days of yore.
The solution for low oil prices is...... low oil prices. Better enjoy the cheap gas while it lasts.
It's got many more hundreds to drop barring a big swing in price.
http://oilprice.com/Energy/Crude-Oil/U.S.-Supply-Growth-To-Halt-This-Sum...
So if rig counts are down significantly, and most in the us and can...... then is it a no brainer to short the fuck out of OAS here with this MASSIVE short squeeze? US Shale to get crushed and BK was the plan after all right? This could be the most obvious play ever but am i missing something here?
Yes the move down started 6 months ago -- try another
Hey you stupid ass mother fucker. Before I come in the screen and beat your mother fucking pussy ass up, I was shorting WLL and OAS long before anyone was so shut your mother fucking mouth bitch. I cahsed out and have been out but now I am asking if they are going to zero, or near zero. Suck my mother fuckin dick bitch.