24/7 Wall Street On North Dakota Rig Counts -- May 27, 2015

24/7 Wall Street is reporting:

Is it possible that the never-ending rig count decline is ending in North Dakota? There could be good news headed the way of companies like Whiting Petroleum Corp., Nabors Industries Ltd, and XTO under Exxon Mobil Corp. . It appears as though the rig count in North Dakota may be confirming what some analysts and investors are looking at as a trough in the rig counts in North Dakota.

The current active drilling rig list in North Dakota was 84 for the May 25, 2015, date. While this is down from 191 at the same time in 2014 (and versus 186 in 2013 and 214 in 2012), it is little changed from the prior two weeks. North Dakota is effectively the second largest state for oil now, thanks to the Bakken shale region.

The news did not act as a driver for the stocks on Monday, but a strong “market sell” bias may be more of an issue than the North Dakota rig counts. It is one issue to try to call a bottom and another issue entirely for certain investors to try to say that the long decline may finally be reaching close to a trough. Picking exact bottoms can be a sucker’s game. Picking a trend can create large gainers, as long as the move isn’t more than 10% or 20% off the mark. As a reminder, stocks pop and drop on any given day, but the stock market tries to start discounting big trends sometimes two quarters out.

Regular readers know the fallacy of tracking rig counts to try to determine "the bottom."

I track rig counts to give me an idea of the amount of "activity" in the Bakken. Rig counts, as a single data point, is relatively useless to predict oil production coming out of North Dakota.