UPDATE 1-U.S. natgas rig count climbs for 3rd week -Baker Hughes

Fri Jul 12, 2013 1:30pm EDT
 
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* Gas-directed rig count up for third straight week
    * Horizontal rigs slip for fifth time in six weeks
    * Oil rig count retreats for third time in four weeks

    NEW YORK, July 12 (Reuters) - The number of rigs drilling
for natural gas in the United States rose this week for a third
straight week, climbing by seven to 362, data from Houston-based
Baker Hughes showed on Friday.
    Despite recent gains, the gas-directed rig count is still
hovering just above the 18-year low of 349 posted three weeks
ago.
    Producers have mostly been curbing dry-gas drilling in favor
of more profitable crude oil and liquids-rich plays such as
Eagle Ford in Texas and Marcellus in Appalachia.
    But the gas price run-up in early May to a 21-month high of
$4.444 per million British thermal units stirred concerns that
producer hedging at higher prices might keep dry gas flowing.
    Gas futures prices on Friday, which were up about 5 cents at
$3.665 per mmBtu just before the data was released at about 1
p.m. EDT, slipped about 2 cents after the report. Front-month
futures hit a 3-1/2-month low of $3.526 two weeks ago.

    The oil-focused rig count fell by four this week to 1,391.
The oil rig count hit a nine-month high of 1,413 four weeks ago,
Baker Hughes data showed. The oil count is down 36 rigs, or 2.5
percent, from the same week last year.
    Baker Hughes reported horizontal rigs, the type often used
to extract oil or gas from shale, lost ground for the fifth time
in six weeks, shedding 10 to 1,058. The horizontal count is down
11 percent from the record high of 1,193 set in May 2012.
    Drilling for natural gas has mostly been in decline for the
last 21 months. The count is down about 61 percent since peaking
in October 2011 at 936, but so far production has not slowed
much, if at all, from the record high hit last year.
    The associated gas produced from shale oil and shale gas
liquids wells has kept dry gas flowing at a brisk rate. The U.S.
Energy Information Administration still expects gas output in
2013 to post a record high for a third year.