U.S. oil drillers cut rigs for 12th week in a row -Baker Hughes

Fri Mar 11, 2016 1:09pm EST
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March 11 (Reuters) - U.S. energy firms this week cut oil
rigs for a 12th week in a row to the lowest level since December
2009 as drillers continue to slash capital expenditures despite
crude prices having apparently bottomed, data showed on Friday.
    Looking forward, many analysts think the rig count will
rebound later this year when prices rise.
    Drillers removed six oil rigs in the week ended March 11,
bringing the total rig count down to 386, oil services company
Baker Hughes Inc said. RIG-OL-USA-BHI
    That compares with 866 oil rigs operating in the same week a
year ago. Drillers started to steadily reduce their rig count
after crude prices began to collapse mid-2014.
    U.S. crude futures were trading just under $39 a
barrel, up 8 percent on the week and set for its fourth weekly
gain on forecasts of tighter supplies as U.S. and non-OPEC crude
output was beginning to fall faster than previously expected.
    After falling as low as $26.05 a barrel last month, its
lowest level since 2003, U.S. crude has rebounded and was around
 $42 for the balance of 2016 and $45 for calendar 2017
    Chevron Corp said this week it will add two rigs in
the oil-rich Permian shale of West Texas in 2016, part of a bet
that crude prices will rise this year.
    Other producers, however, are still reducing rigs due to the
crude oil price rout.
    In Alaska, BP Plc said it will cut the number of rigs
operating in its Prudhoe Bay field from five to two and cut more
than 200 contracting jobs. 
    In an effort to extend the life of existing wells, some
drillers are investing in new technologies, like choking and
lifting, to keep their wells producing oil and natural gas for
    Those efforts however were not expected to boost U.S. oil 
output over the next two years, only slow the rate of decline.
    U.S. oil production was expected to fall from 9.4 million
barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2
million bpd in 2017, according to the federal estimates this
    Analysts at Morgan Stanley this week forecast North American
exploration and production companies would cut spending on oil
and natural gas rigs by over 50 percent in 2016 versus 2015,
before increasing spending by over 40 percent in 2017 versus
    Analysts at Swiss bank UBS lowered their North American rig
count expectations with activity in the first quarter to decline
by 26 percent from the fourth quarter.
    Analysts at Simmons & Co International forecast the overall
U.S. gas and oil onshore rig count would fall around 10 rigs per
week for the rest of the quarter.
    Analysts at Evercore ISI forecast the gas and oil land rig
count would fall by an even bigger 15 rigs per week for the rest
of the quarter before holding mostly steady during the second
quarter and rising in the second half of 2016, 2017 and 2018.
    The total oil and gas rig count this week fell to 480, with
386 oil and 94 gas rigs, the lowest level since at least 1987.
Gas rigs RIG-GS-USA-BHI were at their lowest level since at
least 1987, according to the Baker Hughes records. 

 (Reporting by Scott DiSavino, Barani Krishnan; Editing by
Marguerita Choy)