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The Baker Hughes count of active domestic rotary rigs averaged 752 in April, up 8.4 percent from 694 in April ’22, according to data recently released by the company. That’s well above the nadir of 250 in August ’20 and somewhat below the February ’20 average of 790 prior to the pandemic.
On average, firms need West Texas Intermediate (WTI) to be priced at $62 per barrel to profitably drill a new well, according to the Federal Reserve Bank’s March ’23 survey of oil and gas firms operating in the southwestern U.S. That’s higher than the $56-per-barrel price indicated in the March ’22 survey. The U.S. Energy Information Administration (EIA) forecasts WTI to average $80.31 per barrel through the end of this year, dropping to an average of $75.25 for all of ’24.
Across regions, average breakeven prices to profitably drill range from $56 to $66 per barrel. Breakeven prices in the Permian Basin average $61 per barrel, $9 higher than last year. Despite recent oil price declines, most firms in the survey can profitably drill a new well at current prices.
More than half of the executives surveyed—55 percent—expect their headcount to remain unchanged from December ’22 to December ’23. Thirty-seven percent of executives expect the number of employees to increase, of which 4 percent expect a significant increase and 33 percent anticipate a slight increase. Only 8 percent foresee the number of employees decreasing over the period.
Prepared by Greater Houston Partnership Research Department
Patrick Jankowski, CERP
Senior Vice President, Research
Active domestic rotary rigs averaged 752 in April '23
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