The drilling rig industry has been busy since the last time I wrote about rig movement activity in March. Getting straight to the punchline – below is an animated time lapse of rig movements from March 1, 2014 to August 6, 2014.
This image shows the final frame of the time lapse, representing rig movements over the full time period.
As with my last post on well starts over time, these visuals are the result of my continued exploration of R’s geospatial and animation capabilities. R is an open-source programming language that excels in statistical computing and graphical display.
We care about rig activity because it is a leading indicator of future production in an area. Rig activity in an area today signals new production from that area in the near-term.
In general, we see the same trends observed in the post from March. The Permian Basin in west Texas continues to suck in rigs, primarily from the neighboring Eagle Ford, Granite Wash, and Woodford plays. The Eaglebine, northeast of the Eagle Ford, has also increased its rig count recently, with many of those rigs also coming from the Eagle Ford.
Another observation, which makes intuitive sense, is that movements between active plays are relatively rare. The opportunity cost of the days spent on travel, rather than drilling, as well as long-term relationships between drilling contractors and operators, keep most rigs tethered to a home area. The result on the map is that the regions of high activity appear to glow from all the small rig movements in concentrated areas.
Because of this preference for short movements, semi-isolated regions of activity emerge. The Marcellus/Utica region of Pennsylvania/Ohio/West Virginia sees little exchange of rigs with the rest of the country. The same can be said for the rigs of California. This pattern of regional isolation was also apparent in my post back in March, which covered rig movements from January and February 2014. In contrast, the relatively concentrated areas of activity in the center of the country trade rigs more frequently.
We’ll continue to keep an eye on rig movement patterns for trend changes as the industry continues to evolve.
What do you think? Leave a comment below.