U.S. energy firms this week cut the number of oil and natural gas rigs operating for a seventh week in a row for the first time since July 2020, energy services firm Baker Hughes Co said in its closely followed report on June 16.
The oil and gas rig count, an early indicator of future output, fell by 8 to 687 in the week to June 16, the lowest since April 2022.
Baker Hughes said that puts the total count down by 53 rigs, or 7%, over this time last year.
U.S. oil rigs fell by 4 to 552 this week, their lowest since April 2022, while gas rigs fell 5 to 130, their lowest since March 2022.
Data provider Enverus, which publishes its own rig count data, said drillers added four rigs in the week to June 14, boosting the overall count to 752. The total count remained down about 28 rigs in the last month and down 9% year-over-year.
U.S. oil futures were down about 11% so far this year after gaining about 7% in 2022. U.S. gas futures, meanwhile, have plunged 41% so far this year after rising about 20% last year.
The massive drop in gas prices has already caused some exploration and production companies, including Chesapeake Energy Corp., Southwestern Energy Co. and Comstock Resources Inc., to announce plans to reduce production by cutting some rigs -especially in the Haynesville shale in Arkansas, Louisiana and Texas.
Analysts at energy advisory Tudor Pickering Holt & Co, the energy business of Perella Weinberg Partners, projected the rig count in the Haynesville area would ultimately decline to the high 40s from a recent peak of 76.
Despite some plans to lower rig counts, U.S. crude production was still on track to rise from 11.9 million barrels per day (bbl/d) in 2022 to 12.6 million bbl/d in 2023 and 12.8 million bbl/d in 2024, according to projections from the U.S. Energy Information Administration (EIA) in June. That compares with a record 12.3 million bbl/d in 2019.
U.S. gas production, meanwhile, was on track to rise from a record 98.13 billion cubic feet per day (Bcf/d) in 2022 to 102.74 Bcf/d in 2023 and 103.04 Bcf/d in 2024, according to EIA's projection.
Recommended Reading
Matador Stock Offering to Pay for New Permian A&D—Analyst
2024-03-26 - Matador Resources is offering more than 5 million shares of stock for proceeds of $347 million to pay for newly disclosed transactions in Texas and New Mexico.
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.
Laredo Oil Subsidiary, Erehwon Enter Into Drilling Agreement with Texakoma
2024-03-14 - The agreement with Lustre Oil and Erehwon Oil & Gas would allow Texakoma to participate in the development of 7,375 net acres of mineral rights in Valley County, Montana.
SLB’s ChampionX Acquisition Key to Production Recovery Market
2024-04-21 - During a quarterly earnings call, SLB CEO Olivier Le Peuch highlighted the production recovery market as a key part of the company’s growth strategy.
Oil and Gas Chain Reaction: E&P M&A Begets OFS Consolidation
2024-04-26 - Record-breaking E&P consolidation is rippling into oilfield services, with much more M&A on the way.