U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fourth week in a row, bringing the count to the lowest since November 2021, 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 10 to 566 in the week to May 23.
That 10-rig reduction was the biggest weekly decline in total rigs since September 2023. It was also the first time since September 2024 that drillers reduced the number of rigs operating for four weeks in a row.
Baker Hughes said this week’s decline puts the total rig count down by 34, or 6%, from the same time last year.
Baker Hughes said oil rigs fell by eight to 465 this week, their lowest since November 2021. Gas rigs fell by two to 98, their lowest since last month.
In the Eagle Ford Shale in South Texas, drillers cut four rigs, bringing the total down to 42, the lowest since December 2021.
In the Permian Basin in West Texas and eastern New Mexico, the nation’s biggest oil-producing shale formation, drillers cut three rigs, bringing the total down to 279, the lowest since November 2021.
In the Williston Shale in North Dakota and Montana, drillers cut two rigs, bringing the total down to 31, the lowest since February 2022.
In New Mexico, drillers cut two rigs, bringing the total down to 92, the lowest since February 2022.
In North Dakota, drillers cut two rigs, bringing the total down to 30, the lowest since November 2023.
In Texas, drillers cut five rigs, bringing the total down to 266, the lowest since November 2021.
LOWER PRICES DRIVE RIG COUNT LOWER
The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.
The independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.
That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.
Even though analysts forecast U.S. spot crude prices would decline in 2025 for a third year in a row, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.4 million bpd in 2025.
(Reporting by Scott DiSavino; Editing by David Gregorio)