This past May, there were just 316 active drilling rigs in the United States, the lowest level we’d seen in nearly seven years. What a difference a year makes. The latest figures show the American rig count is now at 683, the highest level in almost two years. The WSJ reports:
The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count has receded. However, the oil-rig count has generally been rising since last summer.
Rigs aren’t a perfect metric for measuring the health of the oil industry. When oil prices were high, companies were expansive in their shale ambitions and the rig count ballooned accordingly. Following the crude price collapse, those same firms shut down their least-productive and least-profitable wells, leaving behind the gushers and the real money-makers. While the rig count fell from more than 1,600 down below 400, U.S. oil production dipped just 200,000 barrels per day over that time period.
That said, it’s fair to say that the rig count today, coming off the back of a bearish time in the oil market, is a more accurate measure of how well the U.S. shale industry is doing. The fact, then, that it added 11 rigs in the past week is confirmation of something we’ve been watching carefully in recent months: Shale is booming once again, and the U.S. energy outlook is looking awfully bright.