U.S. oil drillers this week cut the most rigs since the week to Jan. 18 and reduced the number of oil rigs operating for a second week in a row and for the fifth straight month, as independent producers follow through on plans to cut spending on new drilling and completions.
Drillers cut 20 oil rigs in the week to April 26, bringing the total count down to 805, Baker Hughes Inc., General Electric Co's energy services firm, said April 26 in its closely followed report.
The U.S. rig count, an early indicator of future output, has fallen below year-ago levels when 825 rigs were active.
For the month, the rig count fell by 11 in April, after falling 37 in March, nine in February, 23 in January and two in December.
Major oil companies, like Exxon Mobil Corp. and Chevron Corp., however, are boosting their presence, particularly in the Permian Basin, the largest U.S. shale oil field.
Both U.S. oil majors on April 26 reported lower profits despite increased production due largely to weakness in their refining operations and lower crude oil and natural gas prices.
Exxon Mobil continues to spend heavily to boost its oil and gas output, which had been on a years-long slide. CEO Darren Woods has said he believes the company has an opportunity to invest even as peers have focused more on improving cash flow and share buybacks.
U.S. crude futures were down nearly 4% on April 26 at $62.80 a barrel as the market retreated from its strongest bull run in at least a year amid profit-taking and efforts to resume Russian oil flows that were interrupted by contamination.
Looking ahead, crude futures were trading around $62.70 a barrel for the balance of 2019 and $59.80 in calendar 2020.
U.S. financial services firm Cowen & Co. this week said that projections from the exploration and production companies it tracks point to a percentage decline in the mid-single digits in capex for drilling and completions in 2019 vs. 2018.
Cowen said independent producers expect to spend about 11% less in 2019, while major oil companies plan to spend about 16% more.
In total, Cowen said all of the E&P companies it tracks that have reported will spend about $81 billion in 2019 vs. $85.5 billion in 2018.
Year-to-date, the total number of oil and gas rigs active in the U.S. has averaged 1,036. That keeps the total count for 2019 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.
The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering.
Sustained lower oil prices may lead to Permian consolidation, the return of tough times to other shale plays and U.S. E&Ps helping rebalance global inventories.
Egypt expects investments of at least $750 million to $800 million in the first stage of exploration in the 12 concessions, Petroleum Minister Tarek El Molla said during a press conference.