The number of rigs drilling for oil and natural gas in the United States has fallen to the lowest level since at least 1940, oil services company Baker Hughes Inc said on Friday, as energy firms continued to slash activity amid the deepest energy price rout in a generation.
Combined rigs in the U.S. oil and gas fields fell by nine this week to 480, overwriting a previous record low of 488 in April 1999, according to the closely-followed industry data.
Oil rigs alone fell for a 12th week in a row this week with the rig count down six to 386, the lowest level since December 2009. Gas rigs fell by three to 94, the least since at least 1987.
Energy firms have sharply reduced oil and gas drilling since the selloff in global crude markets began in mid-2014.
Still, many analysts think the rig count will rebound later this year with signs that oil prices had bottomed in the last month after U.S. crude hit a 12-year low of just around $26 a barrel.
U.S. crude futures ended the week 7 percent higher at $38.50 a barrel in the fourth straight week of gains on forecasts of tighter supplies as U.S. and non-OPEC crude output fell faster than previously expected. [O/R]
Chevron Corp said this week it will add two rigs in the oil-rich Permian shale of West Texas in 2016, part of a bet that crude prices will rise this year.
Others, however, were still reducing rigs.
In Alaska, BP Plc said it will cut rigs in its Prudhoe Bay field from five to two and lay off more than 200 contracting jobs.
Concurrently, some drillers are investing in new technologies such as “choking” and “lifting” to get more from their wells, although those efforts may reduce decline rates instead of adding production.
U.S. oil output was expected to fall from 9.4 million barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2 million bpd in 2017, according to the federal estimates this week. [EIA/M]
Morgan Stanley this week forecast North American exploration and production companies would cut spending on oil and gas rigs by over 50 percent in 2016 versus 2015, before increasing spending by over 40 percent in 2017 versus 2016.
Swiss bank UBS lowered its North American rig count expectations with activity in the first quarter seen declining by 26 percent from the fourth quarter.
Simmons & Co International forecast the overall U.S. onshore rig count would fall around 10 rigs per week for the rest of the quarter.
Evercore ISI forecast the combined land rig count would fall by an even bigger 15 rigs per week for the rest of the quarter before holding mostly steady during the second quarter and rising in the second half of 2016, 2017 and 2018.