Privately held E&Ps have been picking up rigs faster than publicly held E&Ps in the past month, Uhlmer adds.

Rigs that are exiting the Haynesville dry-gas play in northwestern Louisiana and northeastern Texas at a rapid pace are finding new homes in South Texas’ Eagle Ford oil and gas-liquids zone. “Since the beginning of the fourth quarter of 2011, the once-prominent Haynesville shale has witnessed an astounding 50-rig decline—a 43% decline—and now stands at 67 rigs,” says Brian Uhlmer, senior oilfield-services and -equipment analyst for Global Hunter Securities LLC.

This is while the overall U.S. rig count has grown 4% in that period, Uhlmer adds, based on Schlumberger Ltd.’s Smith Bits rig data.

At the horizontal Haynesville’s peak in 2010, more than 180 rigs were drilling for the formation’s bountiful gas while gas prices were mostly still above $4 and producers were rushing to secure acreage for which many had paid more than $20,000 an acre to drill. Since then, gas prices have fallen to some $2.50 per million Btu on Nymex, making many new Haynesville wells uneconomic; several E&Ps have wrapped up or are nearly wrapped up with holding their acreage by production (HBP); and/or some E&Ps will allow to expire some acreage that has been determined since the height of the land rush to be less-economic, “fringe” zones.

In the play, an E&P must have at least one producing well per section (640 acres) to HBP the entire section and, thus, be able to return another day to drill the rest of the section without paying for new leases.

Uhlmer says, “Of the 50 fewer rigs drilling in the Haynesville today, the Eagle Ford has been the most welcoming, and currently accounts for 13 of the 30 ex-Haynesville rigs currently working in other plays.”

Among the other rigs, he adds:

--Three have gone to work on the Austin Chalk play just north of the Gulf Coast Basin;

--Three on the Granite Wash gas-liquids-rich play in western Oklahoma and the Texas Panhandle;

--Three in the Permian Basin where new horizontal oil and gas-liquids developments have pushed the total rig count to more than 400;

--One in the Cana gas-liquids-rich play where Devon Energy Corp. is dominant;

--One each in East Texas, other pay in North Louisiana, the new oil-rich Tuscaloosa Marine Shale play in southeastern Louisiana and southwestern Mississippi, and the Woodford shale play in eastern Oklahoma; and

--Three in other plays.

Drillers with the most relocated or idled rigs out of the Haynesville play (by number of rigs and not percentage) since the end of September 2011 are:

--Trinidad Drilling Ltd., down 14, from 18 to four. Eight have gone to the Eagle Ford; one to the Tuscaloosa; and six are idle.

--Patterson-UTI Energy Inc., down 10, from 19 to nine. Two have gone to the Eagle Ford; one to the Austin Chalk; two to other plays; and five are idle.

--Nabors Industries Ltd., down eight, from 29 to 21. One has gone to the Austin Chalk, Eagle Ford, Permian each; one has gone to another play; and six are idle.

--And, Ensign Energy Services Inc. and Unit Corp., each down five, from five to zero. The new location of Ensign’s rigs is to be determined, as Ensign is renaming the rigs, Uhlmer notes, after having purchased them from Rowan Cos. Inc. The five Unit rigs are now in the Granite Wash (one), Woodford (one) or idle (three).

Trinidad, Patterson-UTI and Nabors had the most rigs running in the Haynesville at third-quarter 2011’s end. In the No. 4 spot was Helmerich & Payne Inc., whose count has declined from 10 to eight.

“Nabors remains the most active driller, currently running 21 rigs in the play, followed by Patterson-UTI with nine, and both Helmerich & Payne and (privately held) Scan Drilling with eight rigs.”

According to the Baker Hughes Inc.’s weekly rig count, 1,984 rigs were at work at the end of last week, up 11 from the week before and all of the additional are working on oil targets. “Year to date, Baker Hughes’ oil-rig count has increased by 124 versus a gas-directed decline of 146 rigs,” Uhlmer says.

He notes too that private E&P companies are picking up rigs faster than public companies. “Public E&Ps have put 13 more rigs to work over the past month. Private operators have outpaced public E&P rig-count additions, putting 38 more rigs to work over the past month.”

The U.S. land-rig inventory has plenty more work to do: In just the past week, E&Ps submitted requests for permits to drill 1,318 more wells locations across the U.S., “bringing the four-week average to 1,407 or some 11% above year-ago levels.”

–Nissa Darbonne, Editor-at-Large, Oil and Gas Investor,, Oil and Gas
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