WOW Major US Oil Rig Cut

Did I mention the domestic oil production boom is over?

Helmerich & Payne, the giant contract rig company, announced yesterday that it planned to idle up to 50 rigs over the next month. And that came on top of 11 rigs that it has already mothballed, meaning that in just a few weeks, its shale drilling activity will be reduced by about 20 percent.

NYT writes that the news "sent shudders through the industry."

Overall, the nation’s rig count, a barometer of oil exploration and production activity, fell by 26 in the week that ended Jan. 2, following a drop of 16 the week before, according to the Baker Hughes service company.

NYT reports that  each rig represents about 100 jobs, from roughneck field hands to maintenance workers, and the current rig count is down 85, or 5 percent, from a recent peak in late 2014.

“Demand for rigs is falling off the cliff,” Joseph Triepke, a financial analyst and managing director of Oilpro, an industry publishing company, told NYT. “Exploration and production budgets are down anywhere from 30 to 40 percent and the cuts are happening faster than we thought.”

Triepke predicted that over the next six months, the big three land drilling companies — Helmerich & Payne, Nabors Industries and Patterson-UTI Energy — are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ.”