U.S. energy firms cut the number of oil and natural gas rigs operating for the first time since November even as crude prices soared to their highest since 2018.
The U.S. oil and gas rig count, an early indicator of future output, fell by one to 402 in the week to March 12, according to data on Friday from energy services firm Baker Hughes Co.
That count is 390 rigs, or 49%, below this time last year.
The oil and gas rig count has increased for the past seven months since dropping to a record low of 244 in August, according to Baker Hughes data going back to 1940. But the pace has declined each month this year, from eight in January to five in February and now zero so far in March.
U.S. oil rigs fell one to 309 this week, while gas rigs were unchanged at 92.
U.S. crude futures soared to almost $68 a barrel this week, their highest since 2018. Prices rebounded from last year’s crash, spurred by the coronavirus pandemic’s demand destruction. [O/R]
This week, the government revised down 2021’s decline expected in crude production. Output is seen falling 160,000 barrels per day (bpd) in 2021 to 11.15 million bpd, a smaller decrease than its previous monthly forecast for a 290,000-bpd drop.
Before the pandemic, companies were cutting rigs about four rigs on a weekly basis over the prior year to focus on boosting cash flow, reducing debt and increasing shareholder returns.
But a year ago, rig declines accelerated to an average of 45 per week from late March through early June, until higher prices in August spurred drillers to return to the wellpad.
In the last year, however, Enverus said two gas-focused regions “have actually seen an increase in drilling” with the Haynesville Shale in Arkansas, Louisiana and Texas up three to 52 rigs and the Marcellus Shale in Pennsylvania, Ohio and West Virginia up two to 44 rigs.
Enverus said companies that have added the most rigs year-over-year include Marcellus and Haynesville producers like CNX Resources Corp (from zero to two), National Fuel Gas Co (from one to three) in the Marcellus and Comstock Resources Inc (from five to seven).
The biggest year-over-year declines came from Exxon Mobil Corp (down 57 rigs to just eight now), ConocoPhillips (down 21 to 14) and Chevron Corp (down 19 to nine).