US weekly drill count edges up despite shale concerns - Baker Hughes

Quantum Commodity Intelligence - North American drilling activity was slightly higher the week ending 13 January, registering the first gain in three weeks, oilfield services firm Baker Hughes reported.

The total weekly rig count was up seven at 775, up from 601 rigs counted at the same time last year, or 29%.

The number of rigs dedicated to crude increased by five units on the week to 623, versus 481 last year, while rigs drilling for natural gas dropped by two to 150 – but 41 more than the 109 last year.

Texas added just one rig to stand at 379 and is now up 98 on the year. The Permian Basin, spread across west Texas and New Mexico, was up three rigs at 356, an increase of 63 on the year.

Last week, Morgan Stanley flagged a slowdown in US shale potential, noting growth over the last two years has been entirely from the Permian Basin, while output from all other shale basins had flatlined and remained below pre-Covid levels.

Earlier this month, Pioneer Natural Resources, one of the Permian's largest producers, lowered its shale output forecast, referencing a diminishing volume of what it terms 'good rock'.

Pioneer CEO Scott Sheffield said the company now sees overall Permian output plateauing at around 7 million bpd by 2030, down from its previous prediction of around 8 million bpd and compared to around 5.5 million bpd currently.

Fellow producer EOG Resources has also said it expects its Permian output to flatline this year, citing increased costs and a focus on shareholder returns.

US crude production averaged 12.2 million bpd last week, according to the latest data from the Energy Information Administration, a small increase on the week.

NYMEX WTI trading on the Chicago Mercantile Exchange settled on Friday (13 January) at $79.86/b for the Feb23 contract, a gain of 8.25% on the week.

Front-month Mar23 ICE Brent futures closed Friday at $85.28/b, up 8.5% over the same timeframe.