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Quarterly Summary

1Q 2024 was defined by the continued escalation of geopolitical tension in the Middle East, although this is yet to have a significant impact on commodity prices. This quarter, oil prices averaged US$83/bbl, in line with an average of US$82/bbl in 2023, as continued OPEC+ output cuts, including the 2.2 mmbpd voluntary output agreement, were extended through 1H 2024.

In 2024, Westwood predicts global rig demand at 4,413 rigs, down 6% from their 4Q 2023 forecast due to stagnant oil prices and high service costs. The US saw a larger-than-expected decrease in demand, with rig counts falling below previous estimates. This trend is expected to persist post-2024, with several other countries also expected to see stagnant to declining rig demand. As a result, from 2025 to 2028, an average of 4,595 rigs are anticipated, compared to our 4Q 2023 forecast of 4,786 rigs.

Global Rig Demand Expectations 4Q 2023 vs 1Q 2024
Source: Westwood Global Land Rigs

Despite this drop in demand, contract announcements for new and extended rig leases continued to flow in, with 13 different contracts recorded by Westwood. The Middle East once again led the way with Saudi Aramco awarding rig contracts to 23 land rigs from Helmerich & Payne (H&P), Arabian Drilling and Sinopec as part of their unconventional gas programme.

Outside of drilling activities, 1Q 2024 has seen a continuation in the trend of operator consolidation in the Lower 48. At least five multi-billion-dollar M&A deals have been announced, including Southwestern Energy’s US$7.4 billion merger with Chesapeake. At least seven other deals were also announced globally, including Shell selling its onshore Nigeria subsidiary to the Renaissance Consortium.

At least five identified M&A deals, announced since 4Q 2023, have, however, seen delays to their expected close date. Four of these deals, valued at US$83.9 billion, have been delayed due to the US Federal Trade Commission (FTC) requesting further information. As well as this, Chevron’s US$53 billion Hess acquisition has seen delays due to ExxonMobil’s decision to file for arbitration to assert its right to pre-empt the sale of Hess’ stake in the Stabroek block, offshore Guyana.

This is a preview of the quarterly Global Land Rigs newsletter. For the full newsletter, which includes details on key M&A deals, drilling programmes, contractual awards and other news, please email [email protected] to discuss subscription options. Global Land Rig subscribers can access the full version via the Library.

Ben Wilby
Senior Analyst, Onshore Energy Services
[email protected]

Deborah Yamba
Research Analyst, Onshore Energy Services
[email protected]