2020 Forecast - U.S. rotary rig count

The U.S. has become the world’s largest crude producer, with output hitting 12.87 MMbopd in December. In 2019, operators started reducing activity, in an attempt to meet new ROI expectations.

The average U.S. rig count for 2019 was 943.8 units, an 8.5% decline compared to the previous year’s average of 1,031.5. Starting in December 2018, the U.S. rig count fell 12 consecutive months, to average just 804 units in December 2019. Oklahoma and Ohio suffered the largest percentage declines in the shale states, losing 33% and 29%, respectively. In Texas, 10 of the 12 RRC districts experienced a deterioration in activity, with a statewide decline of 51 rigs, a drop of 10%. In the Permian, RRC District 7C dropped 20%, and RRC District 8 suffered a 7% setback. In District 1, the Eagle Ford play was down an average eight units in 2019, an 8% decline.

However, not all shale states declined. On the New Mexico side of the Permian, the rig count increased 11%, from 95 rigs in 2018, to 106 units in 2019. And in Wyoming, the state’s rig count jumped 23.4%, from an average 27 rigs in 2018, to 33 units in 2019.

Target split. With activity in the Marcellus and Utica slowing, the overall ratio of rigs targeting natural gas versus those drilling for crude oil shifted slightly by the end of 2019, with approximately 84% of rigs targeting oil, and 16% targeting gas. Despite slowing activity in the shale fields, horizontal drilling accounted for the overwhelming majority of wells drilled. During 2019, nearly 88% of all wells drilled in the U.S. were horizontal, with the remaining 17% split between directional and vertical wells. 

Several industry experts are predicting an offshore resurgence, and despite long start-up times required in deepwater operations, there was some evidence of a rebound, as active rigs rose 20.9% in 2019, to an average 23.1 units.