Lower 48 rig count: have we seen the bottom?


As operators become more comfortable in the tough market climate and its slow climb out of oil price collapse, their budgets for 2016 are set and the threshold for new development is within sight. With two weeks of rig-count climb behind us, is it possible that we've finally seen the bottom? Our analysts examine the current conditions in this week's report.

For the second week in a row, the US Lower 48 has seen the rig count climb, prompting us to ask: is the bottom behind us? Most of us watching the market hope so, but it's still a bit soon to call. If we continue to see consecutive weeks of flat or increasing rig counts, our confidence will build that the Lower 48 has bypassed its low and will continue to trend upward.

Since oil prices dipped into the US$30s in March, the rig count has been slowly and steadily rising. And although most operators reacted to the price collapse by shifting into survival mode and making deep spending cuts, budget decisions for 2016 are generally in place. So does that mean we expect to see new rigs added?

Oil price needed to add rigs back

Oil price needed to add rigs back

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More than half the companies we analysed marked US$50 per barrel (bbl) as the price at which they would be incentivized to add rigs. Given the current global market trends, we project WTI to reach US$60/bbl in 2017,, which suggests a rig recovery could start to gain momentum toward the end of the year and into 2017.

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You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including private equity's US$400 million reach into the Permian Basin; potential demand growth in Mexico for US gas; Antero Resources' 55,000 net acreage gain in West Virginia; and our latest supply update and rig-count dashboard.

Top US upstream stories this week

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