Sept 22 – U.S. energy firms this week cut the number of oil and natural gas rigs operating for first time in three weeks, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by 11 to 630 in the week to Sept. 22, the lowest since February 2022.
U.S. oil rigs fell by eight to 507 this week, their lowest since February 2022, while gas rigs dropped by three to 118.
U.S. oil futures were up about 12% so far this year after gaining about 7% in 2022. U.S. gas futures, meanwhile, have plunged about 41% so far this year after rising about 20% last year.
Even though energy companies were on track to boost spending for a third year in a row in 2023 – mostly to cover rising inflation-related costs for labor and equipment – many firms were still more focused on returning money to investors and paying down debt rather than boosting oil and gas production.
The independent exploration and production companies tracked by U.S. financial services firm TD Cowen planned to raise spending by about 19% in 2023 after boosting it by about 40% in 2022 and a modest 4% increase in 2021.
Higher prices for oil put U.S. crude production on track to rise from 11.9 million barrels per day (bpd) in 2022 to 12.8 million bpd in 2023 and 13.2 million bpd in 2024, according to Energy Information Administration (EIA) projections. That compares with a record 12.3 million bpd in 2019.
Oil output from top shale-producing regions, however, is set to fall for a third consecutive month in October to its lowest level since May, according to the EIA.
Despite lower prices for gas, U.S. gas production was on track to rise from a record 98.1 billion cubic feet per day (bcfd) in 2022 to 102.7 bcfd in 2023 and 104.9 bcfd in 2024, according to EIA’s projections in September.
That increase in gas output despite lower gas prices is due mostly to increased interest in oil drilling in shale basins that also produce lots of associated gas like the Permian in West Texas and eastern New Mexico.
(Reporting by Scott DiSavino Editing by Marguerita Choy)