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.
Signed in March 2018, the historic treaty resolved a long-running dispute over the Timor Sea border, which had delayed the development of the Greater Sunrise Field, which was discovered in 1974 and holds about 5.1 trillion cubic feet of gas.
With skittish investors and a growing push toward renewables, will the projected shale growth ever come to fruition?
Britain’s Tullow Oil has delayed the final investment decision (FID) for its Kenya project to 2020 and has not yet sealed a tax deal in Uganda that is needed for the progress of its plans there with Total, Tullow said on June 26.