Back in action, one rig at a time

The oil boom isn’t dead after all. For the first time in five months, a rig in the Williston Basin, where North Dakota’s Bakken shale formation lies, sputtered back to life and started drilling for crude once again. And then one returned to the Permian Basin, the nation’s biggest oil play, contractor Baker Hughes Inc. said Friday. Shale explorers including EOG Resources Inc. and Pioneer Natural Resources Co. say they’re preparing to bounce back from the most prolonged slowdown in U.S. oil drilling The country has lost more than half its rigs since October, casualties of a 49 per cent slide in crude prices during the last half of 2014. Futures rallied above $60 US a barrel earlier this week, and a sudden return to oilfields would threaten to end this fragile recovery. “You’re inviting a lot of pentup supply to come back into the market — not only do you have people drilling again, but you have this fracklog of over 4,000 uncompleted wells,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by phone. “And then we’re in a situation where the market could easily go back into the mid-$50’s.” While rigs are returning to some fields, the total U.S. count has continued to decline, losing 11 this week to reaching a four-year low on Friday. The drilling slowdown won’t reach a real bottom for about another month, James Williams, president of energy consultant WTRG Economics, said by phone from London, Arkansas. “This is an indicator that we’re nearing the end of the bust,” he said. “What we’re going to see now are mixed signals from the different basins as we near the bottom of the cycle.” Carrizo Oil & Gas Inc., Devon Energy Corp. and Chesapeake Energy Corp. lifted their production outlooks this week. EOG said on Tuesday it plans to increase drilling as soon as crude stabilizes around $65 a barrel. Morgan Stanley said underlying data show drilling is already picking up in some counties within Texas’s Eagle Ford shale formation and the Permian Basin of Texas and New Mexico.