U.S. Energy Information Administration (EIA) data “placed U.S. oil production at a robust 13.0 million barrels per day in July, defying a recurring narrative around constrained U.S. supply”, Macquarie strategists noted in a report sent to Rigzone recently.

Yet, doubts around a shale response to high prices have re-emerged as the rig count has fallen, the strategists stated in the report.

“While the rig count has fallen further than we expected and a series of acquisitions of private cos. by public peers represents an ongoing headwind, other indicators offer a more resilient picture,” the strategists said in the report.

“Notably, Bureau of Labor Statistics (BLS) data released … [October 6] shows oilfield labor activity remaining near peak in August. Likewise, permitting data in the Permian for both August and September has been strong,” they added.

In the report, the strategists highlighted that initial September permits for horizontal wells in the Permian/EFS/Bakken were 884/187/55, compared to an initial 852/156/74 in August, which the strategists noted were revised to 842/141/74.

“Although oilfield labor activity may reflect a lagged response to the rig count, and we view permitting as a fairly low confidence leading indicator, the strength seen in both could reflect a supply chain catch-up and/or improving efficiency,” they continued.

“All told, the latter would not be a surprising outcome given a long-term efficiency trend in shale, a tendency towards counter-cyclical gains in prior cycles, and a potentially recovering supply chain,” the strategists stated.

“That said, given the lagged and noisy nature of the data, we believe it’s still a bit early to make a strong case for sharply re-accelerating productivity,” the strategists went on to note.

According to Baker Hughes’ latest rotary rig count, the U.S. currently has 619 rigs, comprising 497 oil rigs, 118 gas rigs, and four miscellaneous rigs. Of its total rig count of 619, 596 are categorized as land rigs, 20 are categorized as offshore rigs, and three are categorized as inland water rigs, Baker Hughes’ rig count showed.

The U.S. oil rig count fell by five week on week, its gas rig count increased by two, and its miscellaneous rig count increase by one, according to Baker Hughes, which showed that the country’s land rig count dropped by four during the same timeframe, and that the U.S. offshore and inland water rig count remained unchanged. The directional and vertical rig counts in the U.S. each dropped by two week on week and the horizontal rig count was flat, Baker Hughes revealed.

Texas dropped seven rigs during the period, North Dakota and Wyoming each dropped one rig, New Mexico added four rigs, and Oklahoma added two rigs, the count outlined. The Permian basin cut three rigs and the Williston basin dropped one rig week on week, while the Eagle Ford and Granite Wash basins each added one rig during the period.

Year on year, the U.S. has dropped 143 rigs, cutting 105 oil rigs and 40 gas rigs, and adding two miscellaneous rigs, Baker Hughes outlined. The country has cut 150 land rigs during the period and added seven offshore rigs, according to Baker Hughes, which highlighted that Texas is the state which has lost the most rigs year on year at 63. 

The Permian has cut 36 rigs year on year, the Haynesville basin has dropped 31 rigs, and the Eagle Ford basin has dropped 22 rigs, the count revealed.

In data released on its site on September 29, the EIA revealed that U.S. crude oil production came in at 12.991 million barrels per day in July, the latest month available in the figures. This figure stood at 12.900 million barrels per day in June, 12.694 million barrels per day in May, 12.650 million barrels per day in April, 12.770 million barrels per day in March, and 12.532 million barrels per day in February, according to the EIA data.

In its latest short term energy outlook (STEO) available at the time of writing, the EIA projects that U.S. crude oil production will average 12.94 million barrels per day in the fourth quarter of this year, 12.78 million barrels per day overall in 2023, and 13.16 million barrels per day overall in 2024. U.S. crude oil production averaged 11.91 million barrels per day in 2022, the September STEO showed.

To contact the author, email andreas.exarheas@rigzone.com