U.S. energy firms cut the most oil rigs in a week since January as a 14-month drilling recovery stalled due to weak crude prices.
Drillers cut seven oil rigs in the week to Sept. 15, bringing the total count down to 749, the least since June, Baker Hughes, a GE company (NYSE: BHGE), said in its closely followed report.
Drillers have not added any rigs since the week of Aug. 11. The rig count, an early indicator of future output, is still higher than the 416 active oil rigs a year ago as energy companies had mapped out ambitious spending programs for 2017 when they expected U.S. crude to be higher than the $50 per barrel where they are currently trading.
Crude prices were up about 5 percent so far this month after declining in five of the past six months, including a near 6% drop in August as rising U.S. output helped to add to a global glut.
U.S. production is expected to rise to 9.3 million barrels per day (MMbbl/d) in 2017 and a record 9.8 MMbbl/d in 2018 from 8.9 MMbbl/d in 2016, according to federal energy projections this week.
Although several E&P companies have trimmed their investments for this year due to the drop in crude prices, they still planned to spend much more this year than last year.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week revised higher its forecast for the total oil and gas rig count, now expecting it to rise to an average of 884 in 2017, 959 in 2018 and 1,114 in 2019. Last week, it forecast 863 in 2017, 932 in 2018 and 1,078 in 2019. That compares with 857 oil and gas rigs so far in 2017, 509 in 2016 and 978 in 2015.
Analysts at U.S. financial services firm Cowen & Co. said capex tracking data was unchanged this week, showing the 64 E&Ps it tracks planned to increase spending by an average of 49% in 2017 from 2016. That expected 2017 spending increase followed an estimated 48% decline in 2016 and a 34% decline in 2015, Cowen said.
Recommended Reading
CNX, Appalachia Peers Defer Completions as NatGas Prices Languish
2024-04-25 - Henry Hub blues: CNX Resources and other Appalachia producers are slashing production and deferring well completions as natural gas spot prices hover near record lows.
Chevron’s Tengiz Oil Field Operations Start Up in Kazakhstan
2024-04-25 - The final phase of Chevron’s project will produce about 260,000 bbl/d.
Rhino Taps Halliburton for Namibia Well Work
2024-04-24 - Halliburton’s deepwater integrated multi-well construction contract for a block in the Orange Basin starts later this year.
Halliburton’s Low-key M&A Strategy Remains Unchanged
2024-04-23 - Halliburton CEO Jeff Miller says expected organic growth generates more shareholder value than following consolidation trends, such as chief rival SLB’s plans to buy ChampionX.
Deepwater Roundup 2024: Americas
2024-04-23 - The final part of Hart Energy E&P’s Deepwater Roundup focuses on projects coming online in the Americas from 2023 until the end of the decade.