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Energy Rigs in U.S. Gain to Highest Level in Two Months

Nov. 27 (Bloomberg) -- Rigs targeting oil and natural gas in the U.S. climbed to a two-month high as producers increased drilling in the south-central region of the country.

Oil rigs rose by four to 1,391, data posted on Baker Hughes Inc.’s website show. The gas count declined by two to 367, the Houston-based field services company said. The total count, including miscellaneous rigs that typically drill for geothermal energy, rose by two to 1,763, the highest since Sept. 13. Texas, Oklahoma and Louisiana gained the most rigs.

Oil production in the U.S. has shot up to the highest level in two decades as energy producers use hydraulic fracturing and horizontal drilling to tap into long-unreachable shale deposits. Companies are also leveraging more efficient drilling techniques to cut the time it takes to bore wells, boosting the yield per rig to records across domestic shale plays.

“Over the last five-plus years, there’s been an enormous amount of exploration and proof work going on, if you like, on how do we drill and complete wells to just identify that there are actually hydrocarbons there,” Derek Mathieson, Baker Hughes’s vice president of strategy and corporate development, said at a conference Nov. 22. “We’re moving into the first generation of true production maintenance in the whole unconventional hydrocarbon area in the United States.”

Rising Output

U.S. oil output rose to 8.02 million barrels a day last week, the highest level since 1989, the Energy Information Administration, the Energy Department’s statistical arm, said today. Crude stockpiles rose 2.95 million barrels to 391.4 million.

West Texas Intermediate crude for January delivery dropped $1.38, or 1.5 percent, to settle at $92.30 a barrel on the New York Mercantile Exchange, up 5.9 percent in the past year.

U.S. gas stockpiles declined 13 billion cubic feet last week to 3.776 trillion, the EIA said today. Supplies were 0.5 percent above the five-year average.

Natural gas for January delivery gained 3.1 cents to settle at $3.895 per million British thermal units on the Nymex, up 3.3 percent in the past year.

Producers are focusing their spending on capital efficiency and “actually making money from production,” Mathieson said. Investments are “moving more into really making this a sustainable business outside of just finding stuff,” he said at the Bank of America Merrill Lynch Global Energy Conference in Miami.

Texas and Oklahoma added the most rigs, rising by three to 834 and 175, respectively. Louisiana gained by two to 112.

Rigs on land rose by two to 1,687, the highest level since August. Rigs in inland waters were unchanged at 19. The offshore rig count, primarily in the Gulf, was also unchanged at 57.

Energy rigs in Canada jumped by 17 to 385, following a seasonal pattern.

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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