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U.S. Energy Rigs Little Changed at 1,768, Baker Hughes Says

Sept. 13 (Bloomberg) -- Energy rig counts in the U.S. were little changed this week, rising by one to 1,768, according to Baker Hughes Inc.

Oil rigs fell by four to 1,361, data posted on the company’s website show. The gas count rose seven to 401, the Houston-based field services company said. Miscellaneous rigs slipped by two to six.

The rig count has fallen by 96 rigs from a year earlier even as U.S. production and oil prices have surged, as drilling efficiency has increased well yields in shale basins like the Bakken. The gain in oil output helped the U.S. meet 87 percent of its energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, according to the Energy Information Administration.

“Rig efficiency is up, and that’s one of the reasons we’ve not had a very rapid growth in rig counts,” James Williams, president of WTRG Economics in London, Arkansas, said in a phone interview. “It doesn’t mean firms are investing less, it’s just that the time it takes them to drill a well is going down.”

U.S. oil output gained 124,000 barrels a day to 7.75 million last week, the highest level since May 1989, according to the EIA, the Energy Department’s statistical arm.

More Efficient

Rising oil prices over the last year would normally push rig counts higher, Williams said. West Texas Intermediate crude for October delivery settled at $108.21 a barrel today on the New York Mercantile Exchange, up 10 percent in the past year and 18 percent in 2013.

Instead, according to Baker Hughes data, companies are drilling more wells from rigs. The wells-per-rig ratio in the Williston basin, home of the North Dakota Bakken fields, increased 25 percent to 3.25 in the second quarter from a year earlier. In the Marcellus basin in the eastern U.S., the ratio has improved 21 percent to 5.71, and in the Eagle Ford in Texas it’s up 23 percent to 4.56.

The number of more efficient directional wells, which enable drilling at multiple angles, has risen to 248 from 207 a year ago, according to Baker Hughes. Vertical wells declined to 444 this week from 524 a year ago. Horizontal wells dropped to 1,076 from 1,133.

More Wells

“You wouldn’t at these prices expect rig counts to slack off at all, but as you come up the learning curve in a new area you’re getting more wells with those rigs,” Williams said.

Oil rig counts may still rise in coming weeks because companies have been filing more permits for onshore drilling, said James C. West, an oil-services analyst for Barclays Plc. Permits reached their highest level this year in August, up 14 percent from July to 5,231 in 30 states the New York investment bank’s research team monitors. An increase in permits tends to precede a gain in drilling by two months, West said in a Sept. 11 research note.

Natural gas for October delivery rose 3.9 cents, or 1.1 percent, to $3.677 per million British thermal units on the Nymex, up 21 percent from a year ago.

U.S. gas stockpiles rose 65 billion cubic feet last week to 3.253 trillion cubic feet, the EIA said yesterday. Supplies were 5 percent below a year earlier and 1.4 percent above the five-year average.

To contact the reporter on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net

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

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