Frac Crew, Rig Count Signal D&C Activity Nears Bottom

July 24, 2020
Print Friendly, PDF & Email

Drilling & completion activity may have reached its bottom, still, a full recovery in production may be years away.

The number of frac crews in operation has been on the rise since reaching a record low of 45 crews in late May. Primary Vision estimates there are currently 67 frac crews operating, down from 324 before markets were put in turmoil by the Saudi-Russia price war and COVID-19 pandemic. This data and some others suggest D&C activity has seen its lows.

Furthermore, in the past few months, E&Ps have consistently announced large capital spending cuts. Halliburton says the capital cuts perhaps aren’t over. During the Halliburton 2Q2020 earnings call on July 20, 2020, Halliburton CEO Jeff Miller said “Drilling activity declines have slowed, and we believe the rig count should find a bottom some time in the third quarter, but a meaningful inflection point in drilling seems further out.”

In fact, the number of drilling rigs operating has decreased through the most recent stats. The number fell for 19 consecutive weeks, now at its lowest level since Baker Hughes started reporting the data. Since March 6, 2020, active drilling rigs have fallen from 793 to 253.

Taking into account rigs, completions, and well economics, U.S. production is likely to keep trending downward. In the AEGIS “CME Curve” case, where recent forward pricing for oil, gas, and NGLs are used, production would not find its nadir until 2023, even though the declines are gentle. If prices were to dip, we expect quicker declines through 2021.

We do expect DUCs to be used to support production in the meantime, and the use of DUCs could cause surprisingly low declines through next year. The increase in well completions will help to stabilize production but drilling activity will have to increase substantially before we see a meaningful recovery.

We continue to monitor oil, gas, NGLs, and regional markets for hedging opportunities. To learn more and see AEGIS opinion and recommendations, go to AEGIS View publications, or contact Like what you see? Share this article with the button on the bottom right of your desktop. Market questions or comments? Contact us at

Back to AEGIS Market Summary beta blog

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More