Energy Rigs in U.S. Advance as Barclays Predicts ReboundLynn Doan
Rigs in the U.S. advanced for the first time in three weeks as drilling permits reached the highest level in more than a year and Barclays Plc predicted a rebound in the count.
Total rigs gained by nine to 1,757, according to Baker Hughes Inc. The oil count increased by five to 1,395, the Houston-based field services company said on its website. Gas rigs were up two to 355. Miscellaneous rigs rose two to seven.
The total count remained unchanged in the second quarter after five straight declines, potentially foreshadowing a rebound in activity and an increase in field-services demand as producers respond to this year’s rise in both oil and natural gas prices. June was the most active month for U.S. land drilling permits in more than a year, according to a Barclays research note.
“With a frustratingly slow expansion of the land rig count to start the year, most investors demonstrated skepticism that demand prospects were improving for service providers throughout most U.S. basins,” James West, an analyst for the Barclays investment-banking unit in New York, said in the note yesterday. “Permitting activity, which typically leads drilling activity by several months, has been strong. We think gains in the rig count will accelerate.”
Natural gas for August delivery rose 3.6 cents to settle at $3.690 per million British thermal units on the New York Mercantile Exchange, up 27 percent from a year ago.
U.S. gas stockpiles gained 72 billion cubic feet in the week ended June 28 to 2.605 trillion, the Energy Information Administration, the Energy Department’s statistical arm, said today. Supplies are 16 percent below year-earlier levels.
U.S. oil output climbed 6,000 barrels a day to 7.27 million last week, EIA data show. Production reached 7.37 million barrels a day in the week ended May 3, the most since 1992. Stockpiles dropped for the first time in four weeks, falling 10.3 million barrels to 383.8 million, the EIA said.
Crude for August delivery rose $1.64, or 1.6 percent, to settle at $101.24 a barrel today on the Nymex, up 15 percent in the past year. Oil rose above $100 a barrel for the first time in nine months as Egypt’s political showdown escalated and supplies declined.
“There’s typically a lag between oil prices and changes in the rig count, so if the recent run-up in oil prices changes the rig count, we’re likely to see it as we get closer to August or September,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone.
A boom 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.
Colorado and Texas gained the most rigs this week, each adding three to 66 and 835, respectively. Pennsylvania lost one, slipping to 53. Rigs in North Dakota, home to the Bakken shale formation, rose by two to 177.
Exco Resources Inc., based in Dallas, agreed to buy Chesapeake Energy Corp. assets in the Eagle Ford and Haynesville shale formations in Texas and Louisiana for about $1 billion, the company said in a statement today. Exco is adding the equivalent of 6,100 barrels of oil production a day in the Eagle Ford and 114 million cubic feet of natural gas in the Haynesville.
Rigs on land rose for the first time in three weeks, gaining six to 1,676. Rigs in inland waters were unchanged at 22. The offshore rig count, primarily in the Gulf of Mexico, climbed by three to 57, the highest since 2009.