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U.S. rig count rebounds to 1,767 from month-low following storms

BY LYNN DOAN

HOUSTON (Bloomberg) -- Rigs targeting oil and natural gas in the U.S. rose for the first time in three weeks as drilling operations recovered from a series of ice and snow storms that sent temperatures plunging across the eastern U.S. Oil rigs rose by two to 1,425, the most since August 2012, data posted on the Baker Hughes Inc.’s website show. The gas count gained five to 342, bouncing back from a 19-year low, the Houston-based field services company said.

The total rig count advanced as energy producers restore operations following storms that poured rain, snow and ice across the eastern half of the U.S. in December and January, slowing oil- and gas-drilling in major basins.

“It was definitely a drag with the ice storms during the later part of the fourth quarter and even into the earlier part of this year,” Trey Stolz, an analyst at Iberia Capital Partners in New Orleans, said by telephone. “You’re also seeing a certainly more positive outlook on North American land services in certain regions, particularly the Permian.”

Rigs in the Permian Basin of Texas and New Mexico climbed by one to 487, the highest count since November 2012, Baker Hughes data show.

Devon Energy Corp. said in a call with analysts Feb. 19 that the majority of its oil production growth in 2014 will come from “aggressive development” in the Permian and in Texas’s Eagle Ford play. Drilling there will boost the company’s light- oil production in the U.S. by about 75% from 2013, John Richels, Devon’s president and chief executive officer, said in the call.

Producers in the Eagle Ford and Permian formations are rapidly increasing their use of rigs drilling multiple wells per pad, Tony Petrello, chief executive officer of Nabors Industries Ltd., the world’s largest land-rig contractor, said in a call with analysts Feb. 19. The company saw a slowdown in operations last quarter because of winter weather, he said.

“Operations in our completion and production services segment either slowed dramatically or ceased altogether in the extreme cold,” Petrello said.

U.S. oil output climbed for a second straight week in the seven days ended Feb. 14, adding 16,000 bopd, or 0.2%, to 8.15 million, data compiled by the Energy Information Administration, the Energy Department’s statistical arm, show. Stockpiles rose 973,000 barrels to 362.3 million.

West Texas Intermediate crude for April delivery fell 55 cents, or 0.5%, to settle today at $102.20 a barrel on the New York Mercantile Exchange, up 10% in the past year. U.S. gas stockpiles dropped 250 Bcf last week to 1.443 Tcf, EIA data show. Supplies were a record 34 percent below the five-year average and 40 percent below year- earlier levels.

Natural gas for March delivery gained 7.1 cents, or 1.2%, to $6.135 per MMbtu on the Nymex and has surged 89% in the past year.

02/21/2014

 

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