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A few weeks ago North Dakota had 174 active drilling rigs, an all-time high. Since then there has been a steady slide. Today, the number of active drilling rigs is down to 168.
It is not unusual for a fluctuation in rig count. But with better weather, higher oil prices, and smaller companies having added (or planned to have added) more rigs, it is surprising that the slide has occurred at all. One would have expected a rise, not a drop.
Most likely this is just random fluctuation and the number of active rigs will go up again any day now.
It's possible some rigs have moved across the border in to Montana. It's possible that some companies are looking at the Niobrara in Colorado and Wyoming, and even the Eagle Ford in south Texas.
Drilling these wells is not inexpensive. The wells get even more expensive when the price of oil goes up, and the price of wells get more expensive when there is more competition for support services, especially fracking. Add to this that recent wells have had lower IPs, which means that it will take longer to pay off these wells. Operators depend on cash flow to fund future operations.
Is the decline in the number of drilling rigs a canary in the coal mine? Are some companies having a cash flow problem funding their announced CAPEX? Or is it simply random fluctuation? If it's the former we could see additional merger activity, or even buyouts. Publicly traded companies may issue more shares to raise cash; privately held companies may sell out.
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See first comment below: I may be completely off base on this posting. More than likely it's purely seasonal. Road restrictions in the spring limit truck traffic on muddy roads. I will leave the post up, but it's probably completely wrong.
