According to the closely monitored report by energy services company Baker Hughes Co on Friday, U.S. energy firms have added oil and natural gas rigs for the first time in four weeks.
This rise in the rig count, which is considered an early predictor of future output, amounted to five, bringing the total to 753 in the week ending April 21. Compared to the same period last year, this represents an increase of 58 rigs or 8%. This week, the number of oil rigs has increased by three to reach 591, while gas rigs have gone up by two to 159.
After experiencing a 7% increase in 2022, U.S. oil futures have fallen by approximately 3% this year. Conversely, U.S. gas futures have dropped significantly, experiencing a decline of around 50% since the beginning of the year, following a 20% increase in the previous year.
On Friday, leading oilfield service provider SLB revised its projections for North American growth this year, with its CEO warning that the market may witness a plateau in activity in 2023. This is anticipated due to private exploration and production (E&P) operators exercising capital restraint, as well as lower gas prices.
Several exploration and production companies, including Chesapeake Energy Corp, Southwestern Energy Co, and Comstock Resources Inc, have recently announced their plans to reduce production by cutting some gas rigs, particularly in the Haynesville shale situated across Arkansas, Louisiana, and Texas. This move was prompted by the drop in gas prices.
According to data from Baker Hughes, the gas rig count in Haynesville has fallen to 64 this week, marking its lowest level since March 2022.
In response to this development, analysts at energy consulting firm Tudor, Pickering, Holt & Co commented in a note that “it is safe to say that we are now witnessing the Haynesville rig releases that are in response to the collapse of natural gas prices since the start of the year.”
