Active Rigs Fall to Zero in Two Oil Hotspots
In the latest sign of the times, and what very well may be an indicator of things to come, two major oil hotspots this week saw their active rig counts reduced to zero: Venezuela and Wyoming.
And the market wants to know who’s next.
Venezuela saw its rig count dip to just one drilling rig in June. But Chevron pulled up stakes in Venezuela over sanctions-related issues, leaving its oilfield services contractor, Nabors Industries, no choice but to exit as well. This is a historic moment for a country sitting on the world’s largest oil reserves, and it can’t all be blamed on the pandemic and U.S. sanctions.
Venezuela has done nearly everything in its power to repel foreign oil and gas companies. Chevron was the last of the brave–or perhaps naive–companies to do business there, and Chevron had to write down all of its $2.6 billion in assets there as a result.
Nabors, which also has a presence in Saudi Arabia, Kazakhstan, and Colombia, expects to see further declines in drilling activities. This is noteworthy because of the 74 rigs Nabors has in operation around the globe, 43 are in Saudi Arabia. In Saudi Arabia, however, the difference is that Aramco seems to be rotating the rigs that are out of service to keep the rigs active (and Nabors expects to lose several more there over Q3). This is expensive for Aramco, while lucrative for Nabors.
Wyoming idled its very…