ARKANSAS, Oct 8 (Future Headlines)- For the third consecutive week, U.S. energy companies have reduced the number of active oil and natural gas rigs, as reported by energy services firm Baker Hughes in its weekly rig count report. The total rig count decreased by four to 619 in the week ending October 6, marking its lowest point since February 2022. Compared to the same period last year, the total rig count is down by 19%, a decline of 143 rigs.
Specifically, U.S. oil rigs fell by five to a total of 497, which is the lowest level seen since February 2022. Gas rigs, on the other hand, increased by two to reach 118. In terms of energy futures, U.S. oil futures have experienced a 3% gain this year, following a 7% increase in 2022. Conversely, U.S. gas futures have declined by approximately 26% this year, following a 20% rise last year.
The Permian formation, located in West Texas and eastern New Mexico and the largest shale oil basin in the United States, saw the removal of three rigs this week. This brought the total oil and gas rig count in the Permian down to 309, a level not seen since February 2022.
Energy firms have continued to reduce active rigs for three consecutive quarters in response to the significant drop in oil prices since mid-2022. Although oil production has recovered to pre-pandemic levels, its growth has slowed due to the time lag between changes in prices and their impact on production, which typically takes around 12 months.
Gas production has also continued to grow, reflecting the delayed response to high prices in 2022 and increased interest in oil drilling in shale basins rich in associated gas, such as the Permian. However, the subsequent sharp decline in gas prices has resulted in a more pronounced slowdown in output growth.
To maximize oil output, shale companies have concentrated the reduced number of rigs on the most promising well sites and drilled longer lateral wells to boost productivity per well. Exxon Mobil, the largest U.S. oil producer, is actively planning to expand its presence in the Permian Basin. The company is in advanced discussions to acquire Pioneer Natural Resources, the third-largest producer in the basin, as reported by sources on Thursday.
Reporting by Moe Khaled; Editing by Sarah White