U.S. Energy Rig Count Up 9 to 1,927, Baker Hughes Says

Rigs targeting oil in the U.S. rose this week as companies boosted drilling in Texas’s Eagle Ford shale formation, the highest-yielding crude play in the U.S.

Rigs drilling for oil gained by five to 1,595, Baker Hughes Inc. said today. The count in the Eagle Ford, where drillers are pulling out more oil per rig than in any other region, jumped the most, gaining nine to 206, data posted on the Houston-based field services company’s website show. Counts dropped in smaller plays such as the Cana Woodford of Oklahoma and Colorado’s Denver-Julesburg Basin, home of the Niobrara formation.

Oil drillers are homing in on their most productive fields after a $14-a-barrel drop in U.S. benchmark West Texas Intermediate crude futures in the third quarter, the biggest decline since June 2012. The lower prices threaten to slow a drilling boom in U.S. shale formations that has propelled domestic output to the highest level in 29 years, cut retail gasoline prices by more than 50 cents since April and helped the nation meet 84 percent of its energy demand last year.

“There are some in the Eagle Ford that are able to drill and produce at $50 a barrel, and those will keep drilling,” James Williams, president of energy consulting company WTRG Economics, said by telephone today from London, Arkansas. “On average, though, we’re still down about 10 oil rigs a week for the last two weeks, and despite this week’s performance, we could still lose another 90 by the end of the year.”

WTI Slips

U.S. benchmark West Texas Intermediate crude for December fell $1.19 to $80.90 a barrel on the New York Mercantile Exchange at 1:48 p.m. East Coast time, down 17 percent in the past year. The contract traded as low as $80.36.

U.S. oil production slipped 17,000 barrels a day in the week ended Oct. 17 to 8.93 million after rising a week earlier to the highest level since June 1985, Energy Information Administration data show. Crude supplies gained by 7.11 million barrels to 377.7 million.

Oil rigs in the Williston Basin, home of the Bakken shale formation that has propelled North Dakota’s crude output past 1 million barrels a day, lost one rig this week to 192. Those in the Permian Basin of Texas and New Mexico, where one-third of the nation’s total oil rigs lie, gained four to 562.

“While operators are likely formulating development options in case prices continue to fall, there hasn’t been an impact yet on unconventional activity,” Matthew Jurecky, head of oil and gas research for the London-based research company GlobalData Ltd., said by e-mail Oct. 17 from New York.

The U.S. gas rig count increased by four to 332, Baker Hughes said. The total advanced by nine to 1,927.

U.S. gas stockpiles rose 94 billion cubic feet last week to 3.393 trillion, according to the EIA. Supplies were 9.1 percent below the five-year average.

Natural gas for November delivery traded at $3.603 per million British thermal units today on the Nymex, down 0.7 percent in the past year.

Before it's here, it's on the Bloomberg Terminal.