U.S. energy firms this week reduced the number of oil rigs operating for a fourth week in a row as producers plan to slash spending for a second consecutive year in 2020 while they struggle to extract profits from the shale boom.
Drillers cut 10 oil rigs in the week to Nov. 15, bringing down the total count to 674, the lowest since April 2017, energy services firm Baker Hughes Co. said in its weekly report. In the same week a year ago, there were 888 active rigs.
Producers expect to spend about $4 billion less in 2019 than in 2018, according to U.S. financial services firm Cowen & Co., as independent E&P companies cut spending on new drilling as shareholders seek better returns in a low energy price environment.
So far, 21 E&P companies tracked by Cowen have released 2020 capex guidance with 15 projecting declines, five with increases and one unchanged, for a 13% year-over-year spending decline.
The oil rig count, an early indicator of future output, has already declined for a record 11 months in a row, but output has continued to increase in part because productivity of those remaining rigs—the amount of oil new wells produce per rig—has increased to record levels in most shale basins.
The U.S. Energy Information Administration projected U.S. crude output will rise to 12.3 million barrels per day (MMbbl/d) in 2019 from a record 11.0 MMbbl/d in 2018.
U.S. crude futures traded below $58 per barrel on Nov. 15, putting the contract on track to rise for a second week as the U.S. and China make progress on trade talks that could boost global economic growth and oil demand.
Looking ahead, U.S. crude futures were trading at about $56 per barrel in calendar 2020 and $53 in calendar 2021 .
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 961. Most rigs produce both oil and gas.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, forecast the annual average combined oil and gas rig count will slide from a four-year high of 1,032 in 2018 to 951 in 2019 and 906 in 2020 before rising to 957 in 2021.
That is the same as Simmons forecasts since late September.
2023-12-08 - California major Chevron Corp. is setting aside $6.5 billion to develop its U.S. shale portfolio next year, with the bulk of the spend allocated in the Permian Basin.
2023-12-07 - Talos Energy’s appointment of Spath succeeds Bob Abendschein as executive vice president.
2023-12-05 - Alexander J. Reyes, CNX Resources Corp.'s former executive vice president of general counsel and corporate secretary, is leaving CNX after 16 years.
2023-12-01 - COP28 gives the private sector—including those from the oil and gas industry—and other delegates an opportunity to chime in on the global climate agenda set by world leaders.
2023-12-01 - Advisers need to sharpen their pencils at the negotiation table, E&P operator Bryan Sheffield said — because “all you're going to do is upset your seller by promising a market that isn't there. No one's going to pay you.”