US rig count down on further Texas, Permian declines: Baker Hughes

Quantum Commodity Intelligence – North American drilling levels continued to decline, with the number of working rigs posting a 14th loss out of the last 15 weeks, oilfield services firm Baker Hughes reported, including a fifth week of losses for Texas and the Permian Basin.

The total rig count fell by five units to 654 the week ending 11 August, which is 109 rigs below the same stage last year, or down 14%.

Oil rigs were steady at 525, but 76 fewer than at the same stage in 2022. The losses came from the gas sector, dropping five units to 123, 37 fewer on the year.

Texas dipped by two rigs to 312 and is now 60 lower than a year ago, while the Permian Basin, spanning West Texas and New Mexico, also dipped by two units to 327 and 19 lower from year-ago levels.

Despite the slump in drilling activity, US shale producers remain upbeat on production targets, extracting more oil from high-yielding basins with increased efficiencies and technologies, albeit at lower growth rates.

Permian

Chevron, the Permian's largest producer, reported record volumes for the second quarter after two-mile-long wells drilled on the Texas side of the basin in Q1 yielded more oil than expected.

The energy giant now expects to increase Permian output by 10% this year and is on track to reach 1 million bpd in the coming years, while Occidental raised its full-year output guidance by 1.3% after success in the Permian's Delaware Basin.

Independents, including Pioneer Diamondback Energy, also raised targets during the recent earnings round.

North of the border, Canada's rig count edged up by two to 190, but still down 11 units on the year.

Baker Hughes said the international count dropped by six rigs to 961 but up 128 on the year amid a boom in offshore exploration.  

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday at $83.19/b for the Sep23 contract, up 0.45% on the week.

Front-month Oct23 ICE Brent futures closed at $86.81/b, up 0.65% over the same timeframe.

US natural gas was firmer over the week as the Sep23 Henry Hub contract on NYMEX closed at $2.77/mmBtu for a 5% gain, boosted by higher international LNG prices over concerns industrial action will curb Australian production.

Natural gas futures, however, eased from five-month highs of $3/mmBtu registered on Wednesday after the US Energy Information Administration said utilities added 29 billion cubic feet (bcf) of gas into storage during the first week of August, above expectations for a 25 bcf build.

In its latest bulletin, the EIA said it expects natural gas production to remain relatively flat for the balance of 2023 and 2024. Dry natural gas output averaged more than 102 bcf/d in the first half of 2023, up 6 bcf/d compared with the same period in 2022, increasing to about 104 bcf/d in 2024.