In a report issued on Friday, energy services company Baker Hughes Co (BKR.O) stated that U.S. energy companies have reduced the operation of oil and natural gas rigs for a seventh consecutive week. This is the first since July 2020.
As a precursor to future output, the oil and gas rig count declined by 8 to 687 in the week ending June 16, marking the lowest count since April 2022.
Baker Hughes reported that this drop resulted in a total reduction of 53 rigs, equating to a decrease of 7% compared to the same period last year.
This week, U.S. oil rigs decreased by 4 to 552, reaching their lowest point since April 2022, and gas rigs dipped by 5 to 130, the lowest since March 2022.
The week saw a reduction of four rigs each in two major shale regions; the Permian, located in Texas and New Mexico, the country’s largest oil basin, and the Marcellus, spanning Pennsylvania, West Virginia, and Ohio, the largest gas basin in the nation.
The Permian rig count plunged to 342, marking its lowest since September 2022, while the Marcellus rig count dropped to 35, its lowest since March 2023, as per the data provided by Baker Hughes.
Enverus, a data provider with its own rig count data, reported that drillers increased the rig count by four in the week ending June 14, raising the total count to 752. However, the total count still shows a reduction of about 28 rigs over the past month and a 9% year-on-year decrease.
U.S. oil futures have declined by approximately 11% thus far in the year, following a 7% gain in 2022. U.S. gas futures, on the other hand, have seen a sharp decline of 41% this year after a 20% increase in the previous year.
This substantial decrease in gas prices has prompted some exploration and production companies, including Chesapeake Energy Corp (CHK.O), Southwestern Energy Co (SWN.N), and Comstock Resources Inc (CRK.N), to reveal plans to slash production by reducing some rigs. This is particularly true for the Haynesville shale area in Arkansas, Louisiana, and Texas.
Energy analysts at Tudor Pickering Holt & Co, a subsidiary of Perella Weinberg Partners, forecasted that the rig count in the Haynesville region would eventually fall to the high 40s, down from a recent peak of 76.
