US drillers reduce oil and gas rigs at lowest level since November 2021, according to Baker Hughes
Baker Hughes, an energy services company, said Friday that U.S. firms have cut back on the number of natural gas and oil rigs for the fourth consecutive week, making it the lowest count since November 2021.
The number of oil and gas drilling rigs, a good indicator of future production, dropped by 10 in the week ending May 23.
This was the first time in 2024 that drillers had reduced their number of rigs for four consecutive weeks.
Baker Hughes reported that the number of rigs is down by 34 or 6% from last week.
Baker Hughes reported that oil rigs dropped by eight this week to 465, the lowest level since November 2021. Gas rigs dropped by two, to 98. This is their lowest level since last month.
Oil and gas rig counts are expected to decline by 5% and 20% respectively in 2024, as the lower U.S. gas and oil prices in recent years have prompted energy companies to concentrate more on increasing shareholder returns and paying off debt than increasing production.
TD Cowen, a U.S.-based financial services company, said that the independent exploration and production companies (E&Ps) tracked by it planned to reduce capital expenditures in 2025 by approximately 3% from 2024 levels.
This compares to spending that is roughly flat in 2024 and increases of 27%, 40%, and 44% in 2022, as well as a modest 4% increase in 2021.
The U.S. Energy Information Administration, however, projected that crude production would increase from a record 13,2 million barrels per daily (bpd), in 2024, to around 13,4 million bpd by 2025.
EIA predicted an 88% increase for spot gas
EIA predicted that gas production would increase to 104.9 billion cubic feet per day in 2025. This is up from 103.2 bcfd, which was the output in 2024. In 2023, it reached a record high of 103.6 bcfd. (Reporting and editing by David Gregorio, Scott DiSavino).
(source: Reuters)
