From Apr-2021 until around Dec-2022, private rigs and frack crews grew at a much faster pace than public rigs and frack crews.
Back in Jul-2021, private rigs and frack crew levels were about even with each other. Then from Aug-2021 until Dec-2022, private rigs and frack crews grew at a much faster pace than public rigs and frack crews. By the end of 2022, private rigs and frack crews were significantly higher than public rigs and frack crews. However, since the beginning of 2023, private rigs and frack crews have been contracting at a much faster pace than their public counterparts. Now, in Mar-2023, the gap between private rigs and frack crews and their public peers has closed significantly.
Summary
The pattern since the middle of 2021 is that the private producers operate at a more volatile and cyclical pace and will respond faster and more significantly to price signals than the public producers. Private producers will expand production faster in up cycles and will reduce production faster in down cycles. Private producers appear to be taking more advantage of the inherent optionality in production than public producers.
Hyperion Update
Rigs in the Haynesville basin are down in early March of this year compared to the beginning of 2023. Real-time rig data by basin and by company is provided by Hyperion.
Chesapeake is taking the great majority of the drop off in rigs compared to the other natural gas producers in the Haynesville basin. Chesapeake’s rigs are now down to 12, compared to 18 at the beginning of the year. The other natural gas producers’ rigs are mostly flat since the beginning of the year. Based on the earnings guidance from the publicly traded producers in the Haynesville basin, we should expect to see further deterioration in rigs towards the end of March and another round of rig drop-offs later during the 2nd quarter of 2023.
