U.S. Rig Count Falls to Lowest Level in Two Months

The U.S. energy rig count declined to the lowest level in two months this week, according to Baker Hughes Inc. (BHI)

The total count fell by 11 to 1,748, the Houston-based field services company said on its website. Oil rigs dropped by 15 to 1,390, a nine-week low. Gas rigs rose by four to 353, the first increase in six weeks.

A resurgence in U.S. gas and oil output, driven largely by hydraulic fracturing and horizontal drilling, helped the nation meet 89 percent of its energy needs in March, the highest monthly rate since April 1986, Energy Information Administration data show. Soaring supplies and more efficient techniques such as pad drilling have driven the energy rig count down from more than 2,000 in early 2012.

Exploration and production companies in the U.S. were expected to cut capital expenditures by 2.1 percent this quarter from a year ago “driven by a focus on pad drilling and cost cutting, as well as lower levels of natural gas drilling,” according to a Bloomberg Industries analysis released yesterday. Pad drilling lets producers put in multiple wells at a single site.

Natural gas for August delivery declined 1.2 cents to $3.57 per million British thermal units on the New York Mercantile Exchange at 1:11 p.m. New York time, up 31 percent from a year ago.

U.S. gas stockpiles rose 95 billion cubic feet in the week ended June 21 to 2.533 trillion cubic feet, 17.1 percent below a year earlier, the EIA, the Energy Department’s statistical arm, said yesterday. Supply gains have topped five-year averages for four straight weeks as mild weather reduced demand.

Oil Output

U.S. oil output gained 1.9 percent to 7.26 million barrels a day last week, EIA data show. Production reached 7.37 million barrels a day in the week ended May 3, the most since 1992. Stockpiles climbed 18,000 barrels to 394.1 million, according to the EIA.

Crude for August delivery rose 35 cents to $97.40 a barrel today on the Nymex, up 25 percent in the past year.

Anadarko Petroleum Corp. (APC), an independent oil and gas producer, will increase its U.S. onshore production by 10 percent to 570,000 barrels of oil equivalent a day, according to a presentation the company made at the Global Hunter Securities Energy Conference in Chicago June 26.

“And what’s stunning about it is we’re able to do this with 45 rigs,” John Colglazier, vice president of investor relations for the Woodlands, Texas-based company, said at the conference. “It’s extraordinarily capital-efficient.”

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

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

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