drilling rig created by Grok on X
ENB Pub Note: This article is from Jeff Krimmel, LinkedIn. He has been a guest on the podcast with Michael Tanner on the Deal Spotlight, and we recommend following Jeff HERE: https://www.linkedin.com/in/jeffkrimmel/
US drilling rig counts are where they were nearly 3 years ago.
It’s a rare stagnant feature of the US economy.
US rig counts today are where they were in late 2021.
They climbed 33% from the end of 2021 to the end of 2022.
They then fell 20% from the end of 2022 to the end of 2023, and they’ve fallen another 6% since.
That puts us back in level territory, while the rest of the economy continues to move ahead.
That’s what we see in the two charts below.
The top chart is US rig count since the beginning of 2012.
I often like to zoom out to this view, to emphasize just how dramatic the activity crashes in 2014-2016 and 2020 really were.
But we’ve walked back a bit of the post-pandemic recovery, which has put considerable pressure on oilfield service (OFS) companies with a North America focus.
That’s what we’ve been hearing on earnings calls the past year or so.
The bottom chart shows us the change in other US economic parameters over the same time frame.
We see US crude oil production is up 12%. US gas production, having fought through catastrophically low prices, is still up 4% over this window.
Real GDP has grown 5%. Job counts are up 6%.
And US E&P equities are way up over this span, as I show with ConocoPhillips and EQT Corporation.
The point here is that OFS companies aren’t just making excuses by pointing to North America activity headwinds.
The drilling sector’s activity level has stalled, and it’s not immediately clear what the catalyst would be for meaningful uplift from here, particularly with OPEC’s production increase coming before long.
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