Unexpected News in Latest BH Rig Counts – 42% Jump in Rigs in…

From time to time MDN takes a look at the Baker Hughes “rig count”–the number of rotary drilling rigs operating in Pennsylvania, Ohio and West Virginia. The “received wisdom” in the drilling industry that is as goes the rig count, so goes production numbers. Used to be if you saw a decrease in the number of rigs in a given geography, maybe 6-12 months later you would see a corresponding decrease in production from that area. No more. Shale drilling has changed all of that. Nowadays the rig counts go down, and production (in PA anyway), doubles! Why? A lot of wells previously drilled are still waiting to be hooked up to pipelines and begin their production. And shale well production is different from conventional well production. The once simple measurement of more rigs/more production (and the reverse) no longer holds completely true.

Rig counts are still, however, a useful metric to track. And sometimes they reveal something surprising, as MDN found out today in reviewing the latest numbers. Rig counts are an indication of where there is an increase (or decrease) in new drilling activity. Landowners eager to have a well drilled on their property can use rig counts to gauge how quickly (or not) that may happen. Supply chain companies that sell services to drillers are also interested in tracking rig counts. So what, exactly, did MDN find that surprised us? The big surprise is where rig counts have recently spiked–significantly. It’s in a Marcellus/Utica state you may not expect…

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