US rig count down for first week since January: Baker Hughes

rig count

For the first time since January, the US rig count fell, according to Baker Hughes. Anadarko photo.

US rig count down by two in week to June 30

According to the weekly rig count report by Baker Hughes, for the first time since January, US oil drillers cut the number rigs this past week and the pace of additions this quarter has slowed as oil prices stagnate.

The US rig count fell by two, bringing the total rig count down to 756.  That is still more than double the 341 rigs during the same week last year.

In Canada, the rig count rose by 19 to 189.

John HorganAnalysts say the decline in the number of active rigs in the United Stated during the week ending June 30 was likely just a brief pause in the drilling recovery that is expected to continue through at least 2019.

Drillers have added rigs for a record 23 straight weeks and they have added rigs in 52 of the past 57 weeks since the beginning of June 2016.

Reuters notes the pace of additions has slowed in recent months due to a drop in oil prices.

During the second quarter of 2017, drillers added 94 rigs, down from the 137 rigs added during the first quarter.

Since OPEC announced its supply cut agreement, the number of rigs in the United States rose by 231.  During the first half of 2016, there were only 195 rigs in operation in the US.

Despite the OPEC production cuts, the global crude oversupply has hung on and concerns about the glut have knocked US crude futures down about 15 per cent so far this year.

On Friday, US crude futures were trading at almost $46/barrel, putting the front-month on track for its first gain in six weeks.

Even with lower oil prices, US shale producers say they plan to continue drilling new wells but say should prices remain below $45/barrel for several months, they will revisit their strategy.

Tim Dove, Chief Executive at Pioneer Natural Resources said his company has adopted newer operating efficiencies that allow his company to drill more.  But, he told Reuters if prices stall for a longer term, “we can pare away and still be a growth company even in a $45 environment.”

Reuters market analyst John Kemp warned US shale companies they are drilling themselves into a deep hole as they barely break even or maybe lose money as costs rise and share prices slide.

Futures for the remainder of 2017 were trading at around $46/barrel and calendar 2918 was at almost $48/barrel.

The US rig count peaked in 2012 at 1,919, according to Baker Hughes.

John Horgan

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