June 7, 2013 / 5:38 PM / 4 years ago

UPDATE 1-U.S. natgas rig count flat for 4th week at 354 -Baker Hughes

* Gas-directed rig count steady, just above 18-year low
    * Horizontal rigs slip for third time in four weeks
    * Oil rig count also drops slightly, still near 8-month high

    NEW YORK, June 7 (Reuters) - The number of rigs drilling for
natural gas in the United States this week remained unchanged
for the fourth straight week, hovering just above an 18-year low
posted in early May, data from Houston-based Baker Hughes
 showed on Friday.
    The gas-directed rig count stood at 354 after sinking to 350
during the week ended May 10, its lowest since June 1995. 
    Producers have mostly been curbing dry-gas drilling in favor
of more profitable oil and liquids-rich plays such as Eagle Ford
in Texas and Marcellus in Appalachia.
    But gas prices, which hit a 21-month high of $4.444 per
million British thermal units in early May, stirred concerns
that producer hedging at higher price levels could keep dry gas
output flowing. Gas futures prices on Friday fell to a
three-month low of $3.814 per million British thermal units.

    The oil-focused rig count fell for the third time in four
weeks, dropping by four to 1,406. The oil count posted an
eight-month high of 1,412 four weeks ago, Baker Hughes data
showed. The oil count is down eight rigs from the same week last
    Baker Hughes reported horizontal rigs, the type often used
to extract oil or gas from shale, have also lost ground in three
of the past four weeks, shedding one to 1,088. The horizontal
count is down nearly 9 percent from the record high of 1,193 set
in May 2012.
    Drilling for natural gas has mostly been in decline for the
last 19 months. The count is down about 62 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 more profitable shale oil
and shale gas liquids wells has kept dry gas flowing at a brisk
rate. The U.S. Energy Information Administration still expects
output in 2013 to post a record high for a third year.
    Gas futures prices, which were up about 1 cent in the  $3.84
area just before the Baker Hughes data was released, slipped
about a penny after the report.

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