Why Did the Natural Gas Rig Count Move Up?
Key Update: US Rig Count down 50% in the Past Year (Part 5 of 10)
Gas rig count increases
In the US, there were 225 natural gas rigs operating in the week ending April 24, 2015—eight higher than the previous week. In the “Other Basins” category, the natural gas rig count increased by three. Rigs in “Other Basins” are those in smaller basins or rigs that don’t fall within a specific geographic basin.
Last week, the natural gas rig count decreased by eight.
Falling natural gas rigs in operation suggest how major natural gas producers like Cabot Oil & Gas (COG), Southwestern Energy (SWN), CONSOL Energy (CNX), and Devon Energy (DVN) are lowering drilling activity. This could mean a slowdown in production growth or even a production decline. Southwestern Energy and CONSOL Energy account for 1.5% of the Energy Select Sector SPDR ETF (XLE).
Natural gas rig counts have been on a downward trend for about three years. The gas-targeted rig count seemed to stabilize over the past six months. It showed ten increases in that period. However, any hope of a reversal from a downtrend was dashed by a decrease of 94 natural gas rigs in the past three months.
One-year gas rig counts are down
The number of active natural gas rigs decreased throughout last year. A year ago, there were 323 natural gas rigs in operation. Currently, there are 225 rigs. That’s a decrease of 98 rigs, or ~30%. In comparison, the rig count dropped by 43 for the week ending April 25, 2014—down ~13% from the year before.
Natural gas rigs in major US shales
In the past year, most of the decline in the natural gas rig count occurred in the Marcellus and Haynesville shales. The number of gas rigs decreased by 17 and 19, respectively. In the past year, the Eagle Ford Shale added six rigs to its natural gas rig total—the most of any shale play in the US.
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