Houston (Platts)--4 Sep 2015 349 pm EDT/1949 GMT

After six weeks of a steady upward march, Baker Hughes' US rig counts were substantially down Friday even as oil prices recovered from six-year lows.

The US oil rig count lost 13 rigs to 662 on Friday, although that is still 5% higher than the recent low of 628 rigs in late June. The total rig count also fell by 13 to 864, which was not far off the recent low of 857 rigs in mid-July.

Analysts said the rig declines are more rooted in current drilling and oil prices than the recent increases that reflected decisions made a few months ago when crude was hovering near $60/b in May and June.

On Friday, WTI front-month crude closed down 70 cents to $46.05/b.

US oil prices dipped below $40/b for three days in the last week of August.

Analysts said the declining rig count is more in line with what they are hearing from oil companies.

"Specifically, the universe of large cap and major operators we track continues to release rigs with their aggregate rig count down by 10% so far in the third quarter," Wells Fargo analyst Jud Bailey said in a report Thursday. In recent weeks, smaller operators helped the US rig count "tread water," Bailey said, since small-cap and private operators increased their unconventional rig count by about 10% in the third quarter.

"I believe this is the beginning of the reaction to the double dip in oil prices, coupled with E&P companies starting to run low on capital," Evercore ISI analyst James West told Platts. "We think we lose 50 to 100 US land rigs by year-end."

By US basin, the biggest oil rig declines this week were seen in the Eagle Ford Shale of South Texas, which fell by five rigs to 78. That is near the trough of 77 rigs in mid-July and down 62% from the recent peak of 206 rigs in late October 2014.

Among bigger shale plays, oil rigs in the Permian Basin of West Texas and New Mexico fell by two this week to 249. That is still up from the recent low of 230 rigs in late June. The Permian is the US' most active basin.

Oil rigs in the Williston Basin of North Dakota and Montana fell by one rig to 72, still higher than a recent low of 69 in mid-July.

Oil rigs in the Cana Woodford play in Oklahoma fell by two to 35; the play saw a recent low of 29 in mid-July. Drilling there reached a peak of 42 last December and again in mid-February.

The Granite Wash in Texas and Oklahoma also fell by two to 15, down from a recent peak of 63 in August 2014.

--Starr Spencer, starr.spencer@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com

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