Embracing a Changing Upstream Market, US Land Rigs down -85

Embracing a Changing Upstream Market, US Land Rigs down -85

The Baker Hughes US Rig Count for land rigs continued to drop to 1387 rigs, down -5.8% or -85 rigs compared to last week, with 80 of the 85 rigs being horizontal. WTI oil prices ended the week higher than last, settling at $51.78. Bloomberg market reports point to the shale bust beginning now as companies cut budgets, layoff employees, and begin asking service companies for price reductions. The changing market conditions will force many companies out.

US Land Rigs Down -5.8%

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A vast 56% of the rigs lost this week came from the Permian and Williston, totaling -47 rigs. The Williston Basin has declined -7.4% compared to last week to 137 and -23.39% related to this time last year. The Permian Basin lost -37 rigs or -8.1% to bring the count to 417 rigs, compared to last week’s 454 rigs. Of the 37 rigs lost in the Permian, 35 were horizontal.

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Horizontal rigs with depth ranges of 10K and below took a hit, decreasing by -10.3% to 356 rigs from last week. The biggest change came from the Permian Basin, which lost -14 of those rigs or -13.6%.

Callon Petroleum -27% Decline in Budget

Callon Petroleum (NYSE: CPE) came in ~26.7% lower than their 2014 budget of $215 million at a range of $150-$165 million. They are expecting to operate with 2 horizontal rigs and increase production by 45% for the 2015 year. The company will use 2 and 4 well pads throughout 2015 and has already secured cost reduction commitments from service companies.

Parsley Energy Plans for $225-250 Million Budget

Parsley Energy (NYSE: PE) announced their capital budget at $225-$250 million for 2015, spending $195-$210 million on drilling and completion activities. They are planning on operating an average of 3 rigs in 2015 with 80%-90% of the horizontal well drilling activity focused on Wolfcamp B. Parsley Energy is a pureplay Permian operator that will likely add to their core acreage position in Upton and Reagan counties. To hold this acreage, the company will operate 1 vertical rig throughout the year.

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