US Natural Gas Rig Count Stayed Put in Week Ended September 4
Is Crude Oil Price Weakness Dragging the US Rig Count?
US natural gas rig count
In the United States, there were 202 natural gas rigs operating in the week ended September 4, unchanged from the previous week. In the past ten weeks, natural gas rigs declined six times and increased twice. The following part of this series discusses the key shales where natural gas rigs were most affected last week.
Since the beginning of this year, the number of natural gas rigs in operation fell by 126. The four-week average reduction in the natural gas rig count was three for the week ended September 4.
In comparison, the four-week average decrease was two for the week ended August 28. Four-week averages give a smoother view of this trend that otherwise can be quite volatile on a weekly basis.
What does this mean?
The smoothed rate of fall in natural gas rigs is accelerating. It suggests that natural gas producers like CONSOL Energy (CNX), Southwestern Energy (SWN), Linn Energy (LINE), WPX Energy (WPX), and Pioneer Natural Resources (PXD) are reducing their drilling activities. In comparison, a rise in the number of rigs in operation indicates a potential increase in production growth. This would be positive for these companies. WPX Energy accounts for 0.13% of the iShares US Energy ETF (IYE).
MLPs specializing in natural gas storage and transportation activities like AmeriGas Partners (APU), DCP Midstream Partners (DPM), and ONEOK Partners (OKS) could be affected negatively if natural gas production falls.
Historical perspective
Natural gas rigs have been on a downward trend for about four years. The number of active natural gas rigs also fell over the last 12 months. A year ago, there were 340 natural gas rigs in operation. Currently, there are 202 active rigs. That’s a fall of 138 rigs, or ~41%.
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