UPDATE 1-Oil drillers dig for the bottom for rig counts

Fri May 6, 2016 3:31pm EDT
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(Updates with rig data issued May 6, paragraph 3)

By Jessica Resnick-Ault

NEW YORK May 6 (Reuters) - For the past year and a half, a chart of the number of U.S. oil rigs in operation has resembled a death-defying ski slope - but soon it may be time to get back on the chair lift.

The U.S. rig count may finally be bottoming out as U.S. oil companies look for oil prices to rally just a bit more, a signal that the time has come to deploy more capital and get production moving again, analysts say.

The number of active oil rigs in the United States has fallen for seven consecutive weeks, as of data released Friday. Some believe the rig count will start to rise, as drillers plan to ramp up production if benchmark U.S. crude reaches the trigger level of $50 a barrel. U.S. crude prices hit a year-to-date high of $46.78 last week.

In the past two weeks, oil producers including Anadarko Petroleum Corp and Pioneer Natural Resources have cited an improving outlook for oil prices, executives said on calls discussing earnings. Dave Lesar, chief executive of oilfield services provider Halliburton Co, said he believes the rig count has hit a bottom and likely will rise this year.

The U.S. rig count generally reacts to prices with a three or four-month lag, so following the nadir for crude in February, it should bottom in the next month, Morgan Stanley's head of energy commodity research Adam Longson said in a report this week.

"The same analysis also suggests a notable increase in rig activity may be ahead - potentially reversing much of the decline over the past several months," he wrote.

Some companies are already resuming drilling on wells that had been put on hold, known as drilled-uncompleted projects, and planning to drill new wells.   Continued...