US Oil Drillers Cut Most Rigs Since May 2016

By Scott DiSavino
Friday, December 7, 2018

U.S. drillers this week cut oil rigs by the most in over two year even as record production has turned the United States into a net oil exporter for the first time in history.

Energy companies cut 10 oil rigs in the week to Dec. 7, the biggest weekly decline since May 2016, bringing the total count down to 877, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

More than half the total U.S. oil rigs are in the Permian Basin, the country's biggest shale oil formation. Active units there declined by four this week to their lowest since early November.

The United States last week exported more crude and refined products than it imported for the first time on record, even as the Organization of the Petroleum Exporting Countries and its allies agreed to fresh output cuts to support prices amid a global glut of oil.

The U.S. rig count, an early indicator of future output, is higher than a year ago when 751 rigs were active because energy companies have spent more this year to ramp up production to capture higher prices.

U.S. crude futures were trading below $54 a barrel on Friday, boosted by the OPEC-led production cuts of 1.2 million barrels per day, putting the front-month contract on track for its biggest weekly percentage gain since June.

Looking ahead, crude futures for calendar 2019 and 2020 were trading around $55 per barrel.

U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies it tracks have provided guidance indicating a 23 percent increase this year in planned capital spending.

Cowen said the E&Ps it tracks expect to spend a total of $89.1 billion in 2018. That compares with projected spending of $72.2 billion in 2017. Cowen said early 2019 capital spending budgets were mixed.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and natural gas rig count would rise from 876 in 2017 to 1,031 in 2018, 1,092 in 2019 and 1,227 in 2020.

Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,029. That keeps the total count for 2018 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.

The U.S. government projected average annual U.S. production will rise to a record high 10.9 million bpd in 2018 and 12.1 million bpd in 2019 from 9.4 million bpd in 2017.

The current all-time U.S. annual output peak was in 1970 at 9.6 million bpd, according to federal energy data.


(Reporting by Scott DiSavino; Editing by Marguerita Choy)

Categories: Finance Shale Oil & Gas Oil North America Shale

Related Stories

MODEC Ramps Up Hammerhead FPSO Work After ExxonMobil's Go-Ahead

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Seatrium Secures ABS Backing for Deepwater FPSO Design

MDL Secures Cable Laying Job in Asia Pacific

Petronas to Leverage AI to Expedite Oil and Gas Exploration Activities

Chinese Contractor Secures Offshore Oil and Gas ‘Mega Deal’ from QatarEnergy

Floating Offshore Wind Test Center Planned for Japan

CNOOC Finds Oil and Gas in South China Sea

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Current News

MODEC Ramps Up Hammerhead FPSO Work After ExxonMobil's Go-Ahead

Aesen, DOC JV Targets Subsea Cable Logistics

Timor Gap Boosts Stake in Finder Energy’s Timor-Leste Oil Fields

SBM Offshore Starts Construction of FSO for Trion Oil Field off Mexico

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Seatrium Secures ABS Backing for Deepwater FPSO Design

MDL Secures Cable Laying Job in Asia Pacific

Hibiscus Petroleum Starts Drilling at Teal West Field off UK

Yinson Production Nets DNV Approval for New FPSO Hull Design

Hanwha Ocean's Tidal Action Drillship Starts Maiden Job with Petrobras

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com