This week, U.S. energy companies reduced the number of operational oil and natural gas rigs for the first time in three weeks, as reported by energy services firm Baker Hughes (BKR.O).
The report, released on Friday, noted a decrease of two rigs, bringing the total to 619 as of February 2.
In 2023, the U.S. oil and gas rig count saw a significant decrease of approximately 20%, following increases of 33% in 2022 and 67% in 2021. This decline is largely attributed to falling oil and gas prices, higher costs of drilling, and a shift in company focus towards reducing debt and enhancing shareholder returns, rather than expanding production.
Baker Hughes reported a decrease in the total rig count by 140 rigs, or 18%, compared to the same period last year. The firm noted that the number of U.S. oil rigs remained unchanged at 499 this week, while the count of gas rigs dropped by two to 117.
In the financial markets, U.S. oil futures have seen an approximate 1% increase in 2024, following an 11% decline in 2023. In contrast, U.S. gas futures have experienced a downturn of about 18% in 2024, after a significant 44% drop in 2023.
Additionally, fifteen independent exploration and production (E&P) companies, monitored by U.S. financial services firm TD Cowen, have indicated plans to reduce their spending by around 3% in 2024 compared to 2023.
In 2023, TD Cowen reported that 25 E&P companies it monitors intended to increase their expenditure by about 20% compared to the previous year.
This followed a 40% rise in spending in 2022 and a 4% increase in 2021. Despite facing lower prices, reduced spending, and fewer rig counts, U.S. oil and gas production was still expected to reach record levels in 2024 and 2025. This growth is attributed to improvements in efficiency and the completion of projects on wells that have already been drilled.
The count of drilled but uncompleted (DUC) wells fell to an all-time low of 4,374 in December, the lowest since federal energy records began in December 2013.
