U.S. Energy Companies Reduce Oil and Gas Drilling Rigs: Baker Hughes Report

2023-12-15 18:03:07

U.S. energy companies this week reduced the number of oil and natural gas drilling rigs for the first time in five weeks, energy services company Baker Hughes said in its closely watched report on Friday.

The number of oil and gas drilling rigs, an early indicator of future production, decreased by 3 to 623 during the week of December 15.

Data provider Enverus, which publishes its own rig count data, reported that drillers reduced the rig count by five in the week ending Dec. 13, which brought the total to 673. The total number of drilling rigs thus decreased by approximately 2% over the past month and approximately 22% year-over-year.

The number of U.S. oil drilling rigs fell by 2 to 501 this week, while the number of gas drilling rigs remained unchanged at 119, according to Baker Hughes.

The number of drilling rigs has therefore fallen from the peak of 784 reached in December 2022, due to the fall in oil and gas prices.

U.S. oil futures are down regarding 11% year-to-date, following gaining 7% in 2022. U.S. gas futures, meanwhile, are down regarding 44%. % since the start of the year, following increasing by around 20% last year.

Given falling oil and gas prices, 14 of the independent exploration and production companies tracked by U.S. financial services firm TD Cowen said they plan to cut spending by regarding 4% in 2024 compared to 2023.

TD Cowen said 25 of the exploration and production companies it tracks plan to increase spending by regarding 20% in 2023 compared to 2022, following increasing spending by regarding 40% in 2022 and 4% in 2021.

Much of this additional spending in 2023, however, went to cover rising inflation-related costs for labor and equipment, as many companies focus more on bringing money back to investors and debt repayment than on increasing oil and gas production.

Even though some producers have reduced new drilling over the past year, oil and gas production is still on track to hit record levels in 2023 and 2024 as companies complete work on their wells already drilled.

The total number of oil and gas wells drilled but not completed (DUC) fell in October to its lowest level since December 2013, according to the U.S. Drilling Productivity Information Administration’s Drilling Productivity Report. energy (EIA). (Reporting by Scott DiSavino; Writing by Chizu Nomiyama)

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