The total U.S. land rig count has topped 1,800 for the first time since 2008, according to the July 8 Land Rig Newsletter Biweekly Report. Leading an overall gain of 40 rigs was a pickup of 36 in the Traditional (≥5,000 ft) rig count, including 17 in Louisiana, 13 in Texas, and 9 each in North Dakota and California. Oil rigs accounted for 28 of the increase, mainly in North Dakota and California. The Golden State hasn’t had that many active rigs since July 2008; most of the added California rigs were being run by 7 operators that weren’t working there as of the previous Biweekly Report.

Meanwhile, the Biweekly Report’s Featured Operators group has posted its smallest market share YTD. That likely reflects the growing role of small, private operators drilling shallow oil wells with oil prices exceeding $90 per barrel for most of the year. This market share has been steadily drifting down since early 2Q 2011, with ExxonMobil and EnCana throttling back the most even as many other Featured Operators expanded their rig fleets significantly.

Expect a sharp increase in Michigan Basin drilling in the months to come, courtesy of a promising new shale play dubbed the Collingwood. Adding to the allure is a liquids component—all the rage in unconventional plays these days. Given the lack of big rigs in Michigan, opportunities abound for 1,000 hp and larger rigs suited for drilling long laterals.

EnCana subsidiary Petoskey Exploration opened the new shale play in Michigan with the testing of the State Pioneer 1-3 well in Missaukee County. In the process, it spawned a record lease sale as operators from outside Michigan scrambled to snatch up acreage in the newest example of the ever-proliferating unconventional resource boom that is redefining U.S. drilling.

The sale drew $178.3 million in bids, or just over $1,500/acre, vs. the $26/acre earned at earlier auctions.  Most of the money came from outside Michigan.  Chesapeake took most of the sale’s leases. EnCana had already built a substantial lease position with >250,000 acres. Lease sale results are being finalized and will be made public in early June.

Three top operators have consistently increased their drilling programs since early December, as shown by a review of biweekly rig counts by The Land Rig Newsletter’s Biweekly Report. EOG added the most rigs during that stretch, with a burst of activity that accelerated sharply last month. EOG’s total count jumped by 22 since the biweekly period ended December 4, 2009, to 59 rigs for the period ended March 12. EOG also turned up among the top four operators in three of the major unconventional plays, with a combined 26 rigs in the Barnett, Bakken, and Eagle Ford shales. For the period ended Dec. 4, EOG didn’t make any of the top four unconventional play lists.  

Among the other top two consistent gainers since December, EnCana is now running 46 rigs, up 14, and Sandridge has added 13 rigs to its present 22 active units. Other companies that have had growing programs in that timeframe—but not necessarily consecutive biweekly increases—are Chesapeake (+19), Forest (+11), Pioneer Natural (+7), Anadarko and Cimarex (each +6), and Southwestern (+5).

Since 3Q 2008, Louisiana Haynesville operators have improved drilling efficiencies by 35% despite a challenging operating environment.  Improved horizontal well drilling times are the key driver behind the efficiency gains. According to analysis published in the February issue of The Land Rig Newsletter, from 3Q 2008 through mid-February 2010, average Haynesville spud-to-release times have been slashed by 14 days to 44. However, today’s average Haynesville horizontal is >1,000 ft longer than a comparable well in 2008. Quarter-to-date through mid-February, drillers were able to penetrate 386 ft/day-35% better than the 285 ft/day in 3Q 2008.

While Chesapeake dominates the play, its competitive advantage is limited. In the current quarter, the company’s wells were drilled in 45 days on average. This is only two days better than the No. 2 operator, Petrohawk, and only three days better than the No. 3, EnCana. Meanwhile, the top Haynesville driller is Trinidad at 26%, followed by Nabors at 22%.