Rigs counts fell sharply
Total oil rig counts declined, -11 to 575, no higher than the level of last June
Horizontal oil rig counts fell, -10 at 522, here too back to June 2022 levels
The Permian horizontal oil rig count was down 4
Our model suggests continued falls in general, although next week could see a technical rebound, given this week’s steep decline
The pace of horizontal rig additions fell to a whopping -5.75 / week on a 4 wma basis.
This number has been negative for 23 of the last 24 weeks
Frac spreads were -10 to 262, a level no higher than November 2021
Overall, the picture looks increasingly like secular decline
In the Permian, rig counts remain flat, essentially unchanged since last summer
As we noted last week, Permian production growth is slowing steadily and the Permian supply could peak as soon as Q3, and most likely within a year
Permian production growth has been maintained by the cannibalization of the play’s DUC inventory, down by an eye-opening one-third over the last year.
At present, the Permian has only 7.8 weeks of DUC inventory at hand, a record low for the play and suggestive of a material lack of promising drilling prospects
In the other plays (all excluding the Permian), the rig count has been falling, although oil production has remained relatively steady
Given falling rig counts in these plays, their oil production may begin to slip off recent levels by, say, Q4 or early next year