Benchmark crude prices diverged in February, as traders weighed global supply/demand dynamics and the possibility that steadily rising interest rates would trigger a global economic recession. WTI dropped 2%, to average $76.83/bbl in February, while Brent traded at $82.59/bbl, up 1% compared to January.
Russian crude. Russian oil production and exports have held up relatively well despite sanctions (IEA). The country has managed to reroute shipments of crude to Asia. In January, Russian output was down only 160,000 bopd from pre-war levels, with a lofty 8.2 MMbopd shipped to markets. But Moscow may be struggling to place all of its production. Deputy Prime Minister Alexander Novak said in early February that Russia would curb output by 500,000 bopd in March, rather than sell to countries that comply with the G7 price caps. Saudi Arabia’s crude production was unchanged, with the kingdom averaging 10.45 MMbopd in February.
U.S. natural gas. In the U.S., natural gas prices at Henry Hub have plummeted $6.43/MMBtu since August ($8.81/MMBtu), to average just $2.38/MMBtu in February, a decline of 73%. The dramatic price drop, despite the destruction of the Nord Stream subsea gas pipelines in September 2022, forced the EIA to revise its 2023 HH gas spot price down to $3.00/MMBtu, down 50% from last year.
U.S. rig count. Despite stability in global crude markets, U.S. drilling declined slightly in February with the rig count dropping 14 units to average 758 in February (-1.8%). The overall Texas count was down seven rigs to 372, with the Permian’s District 8 losing four rigs (208). Operators in District 1 (Eagle Ford) upped the rig count to 35, four more than tallied in January. New Mexico was also on the plus side of the equation, adding four rigs up to 107. Two rig losses were reported in Oklahoma (63), Colorado (18), Wyoming (18) and West Virginia (15).
Drilled but uncompleted. The DUC count continues to build at an alarming rate, especially in regions dominated by natural gas production. In February 2023, there were 4,773 DUCs in the U.S., 401 more than the 4,372 tallied in February 2022. Large y-o-y gains were reported in the Niobrara at 651 (+98%), Haynesville at 673 (+82%). Appalachia at 633 (+50%) and Bakken at 580 (+37%) regions. These four regions account for 46% of the total U.S. DUC count.
International rig count. International activity has steadily increased since May 2022 and has not experienced excessive rig count swings, with the exception of Canada. In January, rigs working outside the U.S. averaged 1,127, 72 more than the 1,055 running in December 2022. The increase was attributed mainly to a 71-rig jump in Canada.
- Applying ultra-deep LWD resistivity technology successfully in a SAGD operation (May 2019)
- Adoption of wireless intelligent completions advances (May 2019)
- Majors double down as takeaway crunch eases (April 2019)
- What’s new in well logging and formation evaluation (April 2019)
- Qualification of a 20,000-psi subsea BOP: A collaborative approach (February 2019)
- ConocoPhillips’ Greg Leveille sees rapid trajectory of technical advancement continuing (February 2019)