U.S. Energy Rigs Decline to 1,762, Baker Hughes Says

Energy rigs in the U.S. fell by seven this week to 1,762, according to Baker Hughes Inc. (BHI)

Oil rigs fell by six to 1,402, data posted on Baker Hughes’ website show. Natural gas rigs were unchanged at 354, the Houston-based field-services company said. Miscellaneous rigs declined by one to six.

The total U.S. rig count, which has risen 14 in the second quarter after declining 15 in the first quarter, “beginning to creep up again after remaining dormant in the first quarter,” Peter A. Ragauss, Baker Hughes’ chief financial officer, said at the UBS Global Oil & Gas Conference in Austin, Texas, May 22. “Oil prices remain favorable, and U.S. natural gas has been a little better than many would have predicted a few months ago.”

Higher energy prices are driving Baker Hughes’ customers to boost drilling activity “in virtually every oil and gas basin around the world,” Ragauss said.

Natural gas for June delivery fell 2.2 cents, or 0.5 percent, to $4.239 per million British thermal units on the New York Mercantile Exchange at 1:11 p.m. New York time, up 60 percent from a year ago.

U.S. gas stockpiles gained 89 billion cubic feet to 2.053 trillion in the week ended May 17, below the five-year average injection of 90 billion, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday.

Oil Output

U.S. oil output slipped a second week, dropping 0.9 percent to 7.26 million barrels a day last week, EIA data show. Stockpiles also fell a second week, losing 0.1 percent to 394.6 million barrels. Supplies reached the highest level in more than 82 years on May 3.

Crude for July delivery dropped 26 cents to $93.99 a barrel today on the Nymex. Prices have gained 3.7 percent in the past year.

Oil futures have traded as much as 24 times higher than gas futures this month, compared with a 10-year average of 15 times, according to data compiled by Bloomberg.

The percentage of rigs targeting oil in Texas’s Eagle Ford shale play has grown to 87 percent, up from 66 percent a year ago, according to data compiled by Bloomberg. The total rig count there is down 10 percent from a year earlier, “likely due to a focus on pad drilling,” Christian O’Neill, a Bloomberg Industries analyst in Skillman, New Jersey, said in a research note yesterday.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Richard Stubbe in Houston at rstubbe1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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