Normally I see the number of active rigs move up or down one rig, maybe two rigs, at a time. One day it's 110, the next day, 109, a couple days later 110, again. But generally, one rig one way or the other. Last week we moved up from 111 to 114 fairly quickly (setting a new record), but now in the past couple of days, the number of active rigs in North Dakota has come down quite quickly, one/day and sometimes two/day.
Right now it's back down to 109. Maybe it's just a coincidence that we've come down this fast, but one has to wonder if something is going on.
I can think of three things: a) backlog in fracking; b) price of oil in flux; and, c) rigs moving into Montana. I really doubt (b) -- despite fact that oil has come down a fair amount in past couple of days, everything points to trending higher. Granted, there has been more talk of China / global recovery slowing down but I just can't see oil companies reacting this quickly. So, although I reference price of oil, I don't think that's the reason for sudden drop in active rigs.
There is some chatter about increased activity in Montana and that's my first choice to explain fewer rigs in North Dakota. If so, that's not a big problem; the entire Williston Basin gains.
I don't know enough about the oil industry to comment on possibility (a) -- the backlog in fracking. But, as I've said before, it seems like it would be expensive to drill a well and not complete it because of backlog in fracking. One has the cash flow to pay the drillers and not yet getting return on oil production. Maybe drillers are reversing the way they schedule things. In the past, they scheduled drilling, and then scheduled fracking, only to be put on a waiting list.
Maybe they are not scheduling fracking, and once they are "penciled in," they spud four to six weeks before fracking crew is to arrive. Of course, if it's necessary to hold a lease, they will drill regardless.
And maybe it's just pure coincidence so many wells have gone inactive in the past few days.
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