Oil rigs declined, -3 to 863
Horizontal oil rigs rose, +2 to 769
The 4 wma change for horizontal oil rigs rose to +0.75 / week
Horizontal oil rig gains look better than the underlying reality because the Cana Woodford recovered from last week, +7 after -6 last week. Thus, the underlying trend is probably marginally negative.
The breakeven oil price to add horizontal oil rigs remains $70 WTI, allowing for the one-off nature of Cana Woodford gains
Frac spreads recovered strongly this week, +10 to 464. The spread ratio is returning to more normal levels and at the current pace should recover completely in the next two weeks.
The Midland – WTI spread is closing rapidly, suggesting that bottlenecks are easing in the Permian. (Slide 7.)
We expect rig counts flat to down for the next few weeks with recovering frac spreads.
If the Midland – WTI spread closes as the futures curve suggests, Permian rig counts could start to rise again, perhaps from mid-to-late October.