US drillers reduce oil and gas rigs a second time in 3 weeks - Baker Hughes

Baker Hughes, a leading energy services company, said that U.S. firms have cut oil and gas rigs this week for the second time within three weeks.

The number of oil and gas rigs, a good indicator of future production, dropped by two in the week ending August 16.

Baker Hughes reported that the total number of rigs is down by 56 or 8.7% from this time last year.

Baker Hughes reported that oil rigs dropped by two this week to 483 while gas rigs increased by one to 98.

Oil and gas rig counts dropped by about 20% in the year 2023, after increasing by 33% and 67% respectively in 2022, 2021 and 2022. This was due to lower oil and natural gas prices and higher labor and equipment cost from rising inflation, as well as companies focusing on debt repayment and shareholder returns rather than raising output.

U.S. Oil Futures are up 7.1% after a drop of 11% in the year 2023. U.S. Gas Futures have fallen by about 14% after a plunge of 44% in the year 2023.

U.S. shale companies continue to increase production with fewer rigs, focusing on improving drilling and fracking efficiencies. Producers are extending their wells up to three miles. They also squeeze more wells on a single drilling platform and fracking multiple wells all at once.

Oil majors are focusing more on ultra-high pressure oil drilling, with new technology and drill vessels that can safely handle the immense forces involved. Exploiting deep-sea wells under extreme pressure could allow the recovery of 2 billion additional barrels in the U.S. Gulf of Mexico. (Reporting by Anushree Mukherjee in Bengaluru Editing by Marguerita Choy)

(source: Reuters)