Hart Energy's exclusive rig counts measure drilling intensity. Our counts exclude units classified as rigging up or rigging down, and also exclude rigs drilling injection wells, disposal wells or geothermal wells. The result is our most accurate assessment of rigs on location working on oil or gas programs as of the sample date. While our process results in a rig tally that is lower than the published numbers from the non-proprietary rig-tracking agencies, Hart Energy believes our product presents the most accurate picture of what is actually occurring in the field.

Think of it as the Big Three. In fact the Permian Basin, the Eagle Ford Shale and the Bakken Shale account for 42% of onshore U.S. rig count, which is a remarkable example of concentration in drilling activity as the U.S. market strides out on the stretch run for 2011.

For perspective, the Bakken and Eagle Ford shale rig counts combined equal the rig count in the Permian Basin (329 versus 330 units). While including the Permian Basin with the Bakken and Eagle Ford may not necessarily appear to be an apples-to-apples consideration, the fact remains that the region is a primary driver in increased rig count onshore so far in the third quarter.

Here's a quick look at the characteristics of drilling dynamics in each play.

Permian Basin

The Permian Basin may lack the sizzle associated with unconventional plays, but the region is still a properly broiled New York Strip when it comes to the meat and potatoes of rising rig count. While voluminous verbiage has focused on the Wolfbone, Wolfcamp and other horizontal tight formation plays, it is a fact that the single item driving Permian rig count higher remains vertical oil drilling for Wolfberry or Spraberry stacked formation targets.

Two neighboring counties, Martin and Midland, which sit atop the heart of the Spraberry, account for a majority of rig count gain in the third quarter. Martin County, in fact, has surged by 12 units in the third quarter, growing from 30 rigs active as recently as July 22 to 42 active on Aug. 19.

Of course activity is gradually rising everywhere in the Permian as small private operators ramp up programs. Normally most areas exhibit concentration as a look at the Top 5 in any given unconventional play will reveal. Not so the Permian, where the Top 5 counties account for just 49% of rig count, the lowest concentration level by far in the major U.S. onshore plays. But it's either Wolfberry, Spraberry or both that comprise the bulk of drilling in these Top 5 counties, which include Martin, (42 rigs), Andrews (32), Glasscock (31), Midland (29), and Upton (27).

Of the 42 rigs active in Martin County, 41 are drilling vertical oil wells into Wolfberry/Spraberry target formations. The percentage of vertical oil drilling is nearly the same in the other four counties.

And what of the horizontal oil play? Sure, it's active too, though largely concentrated in two areas: Eddy County, New Mexico and Ward County, Texas, which each boast 15 units classified as drilling horizontal oil wells largely in search of Bone Spring targets. But horizontal oil, despite the great press, remains a small part of Permian Basin activity, featuring a rig count of 71 that is up 5 so far this quarter, but which still comprises less than 22% of Permian rig activity. By comparison, vertical oil drilling represents 72% of Permian activity, a stunning statistic when considering the general perception that it’s all-horizontal all the time in today's oil and gas patch.

Interesting contrast: While 72% of the Permian is vertical drilling, the onshore market as a whole is 71% non-vertical drilling.

Eagle Ford Shale

If you want to soar like an eagle, you're likely to be found in one of two core areas of the Eagle Ford Shale. There is the southwestern wet gas window in Webb and Dimmit counties and the central gas condensate zone in De Witt, Karnes and Atascosa counties. That's not to ignore the gas condensate activity in La Salle and McMullen counties, but the fact is the Top 5 counties represent 73% of Eagle Ford rig count. These include Karnes (29 rigs), Webb (27), Dimmit (25), DeWitt (22) and La Salle (21).

Similarly the Top 5 operators represent 44% of drilling activity and include Chesapeake and EOG Resources (20 rigs each), ConocoPhillips, Petrohawk and Pioneer Natural Resources (11 rigs each).

Of note, each operator seems to be dominant in its own county kingdom. For example, Chesapeake is the leading driller in Dimmit County, accounting for 11 of 25 rigs, while EOG Resources employs 8 of 29 rigs in Karnes County. Similarly, Petrohawk and ConocoPhillips account for 9 and 7 rigs, respectively, of the 22 active in De Witt County. Both Webb and La Salle counties are more egalitarian in rig count, with the main drillers representing a small percentage of overall activity. In La Salle, Chesapeake accounts for 5 of the 21 rigs active, while Lewis Petroleum in its joint venture with BP represents 7 of 27 active rigs.

Bakken Shale

Operators may be promoting the new Bakken extension into Montana, but the bread and butter of all Bakken activity remains concentrated in just four North Dakota counties. All others are essentially footnotes at the current time. In fact, 80% of Bakken rig count can be found in McKenzie, Williams, Dunn, and Mountrail counties. Furthermore, McKenzie -- with 40 rigs active far distances its peers in the Top Four -- including Williams (33 rigs), Dunn and Mountrail (27 rigs each).

When you say Bakken, you're mostly talking about three primary operators led by Continental Resources, Whiting Oil and Gas and Hess Corp. Continental employs 22 rigs while the latter two employ 13 rigs each. Brigham, which has recently ramped rig count to 10 units, is a distant fourth.

The Bakken is somewhat egalitarian in the fact that another 15 operators employ from three to seven rigs each, accounting for 69 units total, or 43% of rig count.

While rig count remains concentrated in four North Dakota counties, it is generally spread evenly among operators in those four counties, indicating everyone has a piece of the Bakken action with no one company dominant anywhere.

Current Rig Count

Cana Woodford49504948
Arkoma Woodford13141112
Granite Wash60566871
Eagle Ford166164164169
Marcellus (PA)112112118114
Texas Haynesville96813
Louisiana Haynesville76737770
Bossier Shale26242423
Greater Haynesville111103109106
Green River (WY)27262727
Piceance (CO)30303030
DJ/Powder River/Niobrara22232323
Gas Shales325318327320
Oil/Liquid Shales363371367377
Tight Sands139135148151
Total Unconventional828824842848
Total Land Rig Count*1,5421,5381,5551,563


Current vs.
Cana Woodford-149-2.0%
Arkoma Woodford113-4.0%
Granite Wash36411.4%
Eagle Ford51662.0%
Marcellus (PA)-41140.0%
Texas Haynesville5944.4%
Louisiana Haynesville-774-5.4%
Bossier Shale-124-5.2%
Greater Haynesville-3107-1.2%
Green River (WY)0270.9%
Piceance (CO)0300.0%
DJ/Powder River/Niobrara0231.1%
Gas Shales-7323-0.8%
Oil/Liquid Shales103702.0%
Tight Sands31435.4%
Total Unconventional68361.5%
Total Land Rig Count*81,5500.9%


Play3Q 104Q 101Q 112Q 11
Cana Woodford25364443
Arkoma Woodford18181511
Granite Wash67646762
Eagle Ford75102115138
Marcellus (PA)99115118108
Texas Haynesville1211119
Louisiana Haynesville111989082
Bossier Shale29292727
Greater Haynesville152138128118
Green River (WY)31302625
Piceance (CO)31343232
DJ/Powder River/Niobrara24383726
Gas Shales382377362335
Oil/Liquid Shales229280303328
Tight Sands153166162145
Total Unconventional764823827808
Total Land Rig Count*1,3691,4321,4901,469

Source: Smith International

Contact the editor, Richard Mason, at rmason@hartenergy.com.