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Oil Rigs Down, Natural Gas Up as BHGE U.S. Count Flat at 1,075

The U.S. rig count finished even at 1,075 for the week ended Friday (Jan. 11) as gains in the natural gas patch offset a decline in oil-directed drilling, according to data from Baker Hughes, a GE Company (BHGE).

The United States added four natural gas rigs and dropped four oil rigs for the week, putting the combined domestic tally 136 units ahead of the 939 active rigs running in the year-ago period. Total U.S. land rigs increase by one, while one rig departed the Gulf of Mexico and another exited inland waters. Three horizontal units and one vertical unit were added, while four directional units departed, according to BHGE.

After sharp declines in recent weeks, Canada saw 108 rigs return to action, putting the Canadian rig count at 184, down from 276 a year ago. The combined North American rig count ended the week at 1,259, up from 1,215 in the year-ago period.

Among plays, the Marcellus Shale in the Northeast added four rigs to climb to 61 units, up from 48 rigs active in the play this time last year. The Cana Woodford dropped two rigs on the week. The Permian Basin and the Haynesville and Utica shales each added a rig.

Among states, Oklahoma saw four rigs exit the patch to drop its total to 136, versus 121 a year ago. New Mexico, Pennsylvania and West Virginia each added two rigs, while Kansas and Ohio each added one. Louisiana and Texas each dropped two rigs overall for the week.

Recent announcements from producers and oilfield services (OFS) operators have hinted at an overall reduction in upstream capital expenditures (capex) in 2019.

Nabors Industries Ltd., which owns and operates the world’s largest land-based drilling rig fleet, has seen little change to its U.S. operations as crude oil prices sputtered then revived, but management still is planning to be cautious this year by reducing capital spending and paying down debt.

The OFS company provided a preview of fourth quarter results and a preliminary outlook for 2019. Capex in 2018 was “well under $500 million,” and this year capex is targeted at the “$400 million level,” according to management.

Appalachian pure-play Antero Resources Corp. plans to cut its capital spending and development activity this year in response to sliding oil and natural gas liquids (NGL) prices.

Although Antero is the first Appalachian operator to publicly announce its strategy for this year, it is not the only one planning to scale back, as its peers operating in other basins have responded similarly to falling oil prices as the budget season gets underway.

Antero said earlier in the week it would cut its 2019 drilling and completion budget to a range of $1.1-1.25 billion from last year’s level of $1.3 billion. Total spending, including land capital, is forecast to decline to a high of $1.35 billion from $1.45 billion in 2018.

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