US rig count at 7-month high, oil leads gains: Baker Hughes
Quantum Commodity Intelligence – North American drilling activity increased by a healthy five rigs last week as the total count moved to a seven-month high, according to the latest report from oilfield services firm Baker Hughes.
The total rig count increased to 626 the week ending 23 February, although still 127 rigs below the same stage last year, or an 18% drop, as profitable oil prices offset the multi-year lows seen in US natural gas values.
Rigs drilling for oil increased by six to 503 units, but 97 fewer than at the same stage last year. Rigs drilling exclusively for gas was down one at 120, a figure 31 fewer than year-ago levels.
Texas, the largest producing state, added two rigs for a fourth consecutive week to stand at 301, while Oklahoma also added two units. The Permian Basin, spanning West Texas and New Mexico, was up two rigs at 314.
Prices
US oil prices eased back last week as NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday at $76.49/b for the Apr24 contract, down 2.2% on the week.
Front-month Apr24 ICE Brent futures closed at $81.62/b, down 2.5% over the same timeframe.
Natural gas continued to struggle at around multi-year lows, although the Apr24 Henry Hub contract on NYMEX closed the week 4% higher at $1.68/mmBtu, having earlier this month slumped to a post-Covid low of around $1.50/mmBtu.
At one point last week, natural gas prices rebounded more than 10% after gas producer Chesapeake announced it would slash gas output this year due to tumbling prices.
The company, one of the largest natural gas producers in the country, said in an earnings call with analysts that it plans to reduce capex in 2024 by 20% while slashing production.
Chesapeake added that it currently operates nine rigs — five in Haynesville and four in Marcellus, but given "market dynamics," it plans to drop one rig and one frac crew in each basin by midyear.
The Marcellus play in the Appalachian Basin (mainly in Pennsylvania, West Virginia, and Ohio) is the largest in the US, while Marcellus, Permian and Haynesville account for over 50% of US dry natural gas production.
