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U.S. Drops One Natural Gas Rig while Oil Drilling Lifts Baker Hughes Count

The United States dropped one natural gas rig for the week ended Friday, but a big increase in oil-directed drilling helped grow the domestic count by double digits, according to data from Baker Hughes Inc. (BHI).

U.S. drillers brought 12 oil-directed rigs back to the patch for the week, leaving the U.S. tally up 11 week/week at 947. That’s versus 712 rigs running a year ago.

Two rigs departed in the Gulf of Mexico, offset by 13 rigs added on land. Nine vertical units and six horizontal units were added, while four directional rigs were removed, according to BHI.

Canada saw 13 rigs added during the week, 12 oil-directed and one drilling for gas.

The combined North American rig count ended the week at 1,285, up 24 week/week and up 228 from 1,057 rigs in the year-ago period.

By basin, the Permian, which straddles West Texas and southeastern New Mexico, led the way for the week, adding 18 rigs to finish at 427 versus 291 a year ago. In the Northeast, the Marcellus Shale also had another strong week, adding four rigs to reach 55 from 39 a year ago.

The Cana Woodford saw the biggest week/week decline, dropping three rigs to 68 from 49 a year ago, while the Barnett, Eagle Ford, Haynesville and Utica shales each dropped one rig, as did the Mississippian Lime, according to BHI.

NGI’s more detailed breakdown of the Cana Woodford in Oklahoma shows the SCOOP, aka, the South Central Oklahoma Oil Province, down four rigs for the week to finish at 20, with the STACK (the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) adding two rigs to end at 48.

One Cana Woodford rig not operating in the SCOOP or STACK departed for the week, NGI’s breakdown indicated.

Among the states, Texas was the biggest gainer, up 13 rigs for the week, while New Mexico gained three, unsurprising given the bullish week in the Permian. In the Appalachian Basin, West Virginia saw four rigs return to end at 19, more than double the eight rigs running there a year ago.

States losing rigs for the week included Oklahoma (down four), Louisiana (down three), Ohio (down one) and Utah (down one), according to BHI.

The week’s gains in oil-directed drilling come as crude oil futures on the New York Mercantile Exchange have been trading above $65/bbl. As of Friday afternoon March crude oil was trading above $66/bbl, up about 79 cents on the day.

Major oilfield services (OFS) operators have started weighing in on the outlook for North American exploration and production in 2018. Following the signal of Schlumberger Ltd., which reported earlier this month, Halliburton Co. reported higher profits in 4Q2017 thanks to strength in its U.S. land services.

“The North America completions market is tight, and demand for our completions equipment and our service quality remains strong,” said CEO Jeff Miller during a conference call. “Commodity prices are supportive of increasing activity in North America, and I am encouraged by the increase in tender activity and the positive discussions we are having with our international customers.”

Baker Hughes, a General Electric company, also shared a bright outlook for 2018 during a conference call to discuss quarterly results.

“Overall, we continue to see improvement in activity as early indications of customer capital spending in 2018 are encouraging, particularly for our shorter-cycle businesses,” CEO Lorenzo Simonelli said.  “International activity is stabilizing, and we are seeing signs of activity increase, both in the volume and size of tenders for new work, as customers feel more confident about their operating costs and commodity price stability.”

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