Baker Hughes, an energy services firm, reported this week that US energy companies continued their trend of decreasing the number of operational oil rigs for the eighth week straight, according to their highly-regarded Friday report.
The consolidated count of oil and natural gas rigs, considered a preliminary sign of forthcoming output, dipped by five, reaching 659 in the week of August 4th. This marks the lowest count since March 2022, with drillers having reduced rigs for the 13th time in the recent 14 weeks.
This reduction brings the total rig count to 105 units or 14% lower compared to the same period last year, stated Baker Hughes.
This week, US oil rigs declined by four, making a total of 525 – their lowest since March 2022, for the eighth consecutive week, while the number of gas rigs remained at 128. Enverus, a data provider, shared its own rig count data, indicating an addition of 13 rigs for the week ending August 2nd, bringing the total to 724. Nonetheless, the overall count was down by one rig over the last month and decreased by 16% on a yearly basis.
US oil futures experienced a surge over the past six weeks and were approximately 4% higher this year, after a 7% increase in 2022. On the contrary, US gas futures plummeted about 43% this year following a 20% rise last year.
The decrease in gas prices has prompted shale producers, such as Pioneer Natural Resources and Devon Energy, to tighten their budgets and anticipate reduced drilling and completion activity in the upcoming months.
Despite the intentions to decrease rig counts, independent exploration and production companies monitored by financial services firm TD Cowen are on course to augment spending by nearly 19% in 2023, following a 40% increase in 2022 and a 4% rise in 2021.
However, US crude oil production fell to 12.66 million barrels per day (bpd) in May, the lowest since February, as indicated by Energy Information Administration data this week. This signals that declining prices and a decrease in drilling activity have finally peaked and are starting to reduce output.
Even with reduced gas prices, production in the U.S. Lower 48 states increased by 0.7 billion cubic feet per day (bcfd) to a record 115.0 bcfd in May, according to the EIA, surpassing the previous high of 114.3 bcfd in April.
