Rig Count Tops 1,700
Tuesday, December 28, 2010
For the first time in more than 2 years, the overall rig count has topped 1,700 and oil futures prices have closed above $90/bbl. Yet natural gas prices are about two-thirds of their 2008 lows. Meanwhile, the gas rig count is about 54% of the total today vs. 80% in that same time span, and even gas shale rig counts have plateaued—with the glaring exception of the Marcellus. Why? Superior economics, for one. That is what is drawing a lot of M&A action to the play. Marcellus deals accounted for nearly half of US gas-focused transactions in 2010. That’s a strong endorsement of the play, given the bleak outlook for gas prices. More deals mean more drilling.
So, barring a plunge well below $3/Mcf, The Land Rig Newsletter team expects to see the Marcellus holding up in 2011 even as drilling to hold acreage winds down in other gas shales. Rig counts in oil and liquids-rich plays should continue trending higher. However, the pace is likely to slow somewhat due to infrastructure bottlenecks and demand constraints.
Category: U.S. Land Industry Review