New York (Platts)--13Mar2015/544 pm EDT/2144 GMT

The US land oil fields continued to shed rigs this week while production kept climbing.

The land oil rig count fell by 56 to 866, Baker Hughes said in its weekly report.

Analysts expect the rig count to keep falling until at least the second quarter unless oil prices recover sufficiently enough to encourage more drilling before then.

In the big three onshore basins -- the Permian, Eagle Ford and Williston -- rig counts fell 23 to 305 for the week ending Friday, two to 127 and four to 104, the Baker Hughes data showed.

There was also a sizable 19-rig decrease to 186 in what Baker Hughes calls the "Other" category, which is defined as "basins that are much smaller in size and geographies that do not fall within a specific basin."

PRODUCTION INCREASING, NOT CORRELATED TO RIGS Production keeps climbing, despite the decrease in rigs. The US Energy Information Administration reported earlier this week that output rose an average 42,000 barrels a day to average 9.366 million b/d for the week that ended March 6.

Also, in the agency's monthly Short-Term Energy Outlook released earlier this week, 2015 production is expected to climb an average 700,000 b/d over 2014 totals to 9.35 million b/d.

While the rig count can provide a picture of upcoming production trends, there's no one-to-one connection between rigs and production volumes.

One reason is because producers are drilling more wells with fewer rigs. For instance, the average time to drill a well in the Anadarko, Permian and Williston basins fell throughout 2014, according to Bentek Energy, a unit of Platts.

In the Anadarko Basin, the average drill time sped up three days to 26. The Permian Basin average fell to 22 from 29 and, in the Williston Basin, the average time to drill a well fell to 13 days at the end of 2014 from 18.

There also is a backlog of uncompleted wells, which gives a false picture that, while rigs may be employed, producers may hold off on completing wells until prices or costs recover to a point that makes completion more profitable.

In North Dakota, home of the prolific Bakken Formation in the Williston Basin, there was a backlog of 825 uncompleted wells at the end of January, the state's Department of Mineral Resources said Thursday. This was up 75 wells from December. Uncompleted wells can be brought to production within 30-60 days, and has become a form of storage for producers.

Even though North Dakota's January oil production fell 37,000 b/d to 1.190 million b/d from December, there was plenty of production set to come online when producers see an opportunity.

And whenever those wells eventually come onstream, their production would not be connected to that week's rig count.

--Benjamin Morse, benjamin.morse@platts.com
--Edited by Valarie Jackson, valarie.jackson@platts.com

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