US drill count sees largest monthly fall since 2020: Baker Hughes

Quantum Commodity Intelligence – North American drilling activity shrunk for a fourth consecutive week, while also registering the largest monthly fall since the height of the pandemic in 2020, oilfield services firm Baker Hughes reported.

The total weekly rig count fell by nine units to 711 the week ending 26 May, down 16 year-on-year, while the monthly tally slumped by 44 rigs during May.

The number of rigs dedicated to crude fell by five to 570, which was down 21 for the month and four fewer than at the same stage in 2022.

Rigs drilling for natural gas were down four units at 137, and now 14 rigs lower compared to the same time last year. The monthly fall of 24 was the largest since 2016.

Texas bucked the national trend, adding two rigs to stand at 359, up one from a year ago, while the Permian Basin, spanning West Texas and New Mexico, added one rig to stand at 350 for an increase of eight on the year.

The losses were recorded in smaller production regions, including Oklahoma, which dropped by five units.

A fall in drill rigs is viewed as a precursor to slower future production growth and what some see as stagnation in the shale sector, leading to consolidation within the industry.

Last week, US major Chevron announced it has entered into a definitive agreement with PDC Energy to acquire all of the outstanding shares of the independent producer, acquiring sizable operations in Texas and Colorado and boosting its capacity in the Permian Basin.

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday (26 May) at $72.67/b for the Ju123 contract, up 1.6% on the week.

Front-month Jul23 ICE Brent futures closed at $76.98/b, up 2.5% over the same timeframe.

Meanwhile, Natural gas prices were lower, with the Jun23 Henry Hub contract on NYMEX closing at $2.307/mmBtu on Friday, down 10% on the week and halting the mid-month rebound.