Baker Hughes US rig counts keep falling as domestic output poised to
flatten
Houston (Platts)--17Apr2015/949 pm EDT/149 GMT
US rig counts continued to fall this week, although the pace of the
decline has slowed, Baker Hughes data showed Friday, in the wake of
other figures showing production growth is easing.
During the week ended April 17, 734 oil rigs were active in the US, down
26 from last week, while the total rig count fell by 34 to 954.
The size of weekly rig count declines, which mounted since December in
response to a 50% drop in oil prices from mid-2014 peaks of $107/barrel,
has lessened in recent weeks, the data showed.
"Over the last month, the average weekly rig count drop has slowed to
around 30 rigs/week from roughly 70/week in the preceding two months,"
RBC Capital Markets analyst Kurt Hallead said in an investor note
Friday.
As the rig count nears a 50% peak-to-trough move, "we think weekly
declines continue to decelerate," Hallead said.
Oil rigs have dropped 54% from the Q4 peak of 1,609.
Among specific shale basins, the Mississippi Lime play in Oklahoma and
Kansas showed the largest single rig drop this week, falling to 31 rigs.
The region saw tornadoes and flooding in the last couple of days.
Five oil rigs were dropped in the Williston Basin of North Dakota and
Montana, and Permian Basin of West Texas and New Mexico, with the total
rigs in those regions falling to 84 and 255, respectively.
Meanwhile, signs of flattening domestic output growth have continued to
sprout.
The US Energy Information Administration's monthly Drilling Productivity
Report on Monday estimated net production from the seven largest
domestic shale oil plays will fall by 57,000 b/d in May to about
5,561,000 b/d.
That is the first time in the 18-month history of the DPR to show an
overall net output decline.
EIA had projected net declines in April for the Bakken Shale, the Eagle
Ford Shale in South Texas and the Niobrara Shale in Colorado and
Wyoming, and those declines steepened in the agency's May forecast.
Of the four largely oil basins, the Permian alone remains on track for
net growth in April and May, EIA predicted.
EIA also this week showed US oil production on a four-week moving
average at 9.399 million b/d as of the week ended April 10, down from
9.408 million b/d the prior week.
Meanwhile, oil production in North Dakota fell for the second
consecutive month in February, the state's Department of Mineral
Resources said Tuesday.
The state's crude output declined 14,000 b/d to 1.177 million b/d,
down a total of 50,000 b/d since hitting its peak in December.
James West, an analyst at investment bank Evercore ISI, said US
production has flattened and will likely fall around mid-year.
As for the rig count, "I still think we'll bottom this quarter, towards
the end of the quarter," West said in an email. "We'll then be flattish
through year-end."
--Starr Spencer,
starr.spencer@platts.com
--Edited by Kevin Saville,
kevin.saville@platts.com
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