We’ve entered the Tom Petty zone of rig count decline. Talk to drilling contractors and they report business is Free Falling, Free Falling.
That’s particularly true in Texas and the Anadarko Basin. Tight formation rig count dropped 39 units this past week, including 22 units in the Permian, five in the Eagle Ford and six units in Oklahoma’s Anadarko Basin. The Permian is regressing towards the original peak in drilling rig activity in 2014. While other regional markets fell again after 2015, the Permian saw rig count move upwards countercyclically so a return to 2014 peak levels is a troubling milestone.
Rigs stacked out at the rate of five per day this past week and that rate of decline will accelerate going forward. Curiously, unconventional rig count has not changed materially in Appalachia or the D-J Basin, although the former was already operating at maintenance level only.