Baker Hughes (BKR.O), a leading energy services firm, reported this Friday that U.S. energy companies have continued to decrease the number of operational oil and natural gas rigs for the second consecutive week, marking the largest reduction of oil rigs since early June.
According to the report, which serves as a preliminary measure of future production, the rig count decreased by six to 669 in the week ending July 21. This represents the lowest count since March 2022.
Moreover, this reduction marks the 11th occasion in the recent 12-week span where drillers have downsized their rig operations.
This week saw U.S. oil rigs decreasing by seven to a total of 530, the lowest number since March 2022, and gas rigs also declined by two, bringing the count to 131.
According to Baker Hughes, drillers reduced four rigs in the Permian region, encompassing West Texas and eastern New Mexico, which is the country’s largest shale oil formation. This reduction takes the total to 333 rigs. Additionally, drillers cut two rigs in the Eagle Ford area in South Texas, decreasing the total rig count in this shale basin to 57. These figures represent the lowest in both areas since April 2022.
Data analytics firm Enverus, known for its rig count data, reported an increase of five rigs for the week ending on July 19, raising the total to 733. However, the total rig count has still decreased by approximately seven rigs over the past month and shows a 15% reduction on a year-over-year basis.
This week, Baker Hughes, alongside competitors Halliburton (HAL.N) and SLB (SLB.N), expressed concerns regarding a slowdown in U.S. shale activity. This is mainly due to producers exercising stringent control over spending in the aftermath of the 2020 economic downturn and in response to weakening oil and gas prices.
U.S. oil futures have seen a decline of roughly 4% this year, following an increase of approximately 7% in 2022. Concurrently, U.S. gas futures have experienced a sharp drop of about 40% this year, in stark contrast to a rise of about 20% the previous year.
According to the U.S. Energy Information Administration’s (EIA) monthly Drilling Productivity Report released this week, U.S. shale oil and gas production is set to experience a decrease in August. This will mark the first decline since December.
