August 9, 2013 / 5:45 PM / in 4 years

UPDATE 1-U.S. natgas rig count slips to 386-Baker Hughes

* Gas-directed rig count falls, first drop in 7 weeks
    * Horizontal rigs lose for first time in 4 weeks
    * Oil rig count sheds 3 rigs to 1,388, 2nd straight decline

    NEW YORK, Aug 9 (Reuters) - The number of rigs drilling for
natural gas in the United States fell by two this week to 386,
data from Houston-based Baker Hughes showed on Friday.
    It was the first drop since the gas-directed rig count
posted an 18-year low of 349 seven weeks ago.
    Recent rig count gains have stirred concerns that new
investment in gas pipelines and processing plants, particularly
in the East, will allow producers to pump even more supply into
an already well-supplied market.
    Gas futures prices on Friday, which were down about 2 cents
at $3.277 per million British thermal units just before the data
was released, slipped another 2 cents after the report.
    The oil-focused rig count fell for a second week, shedding
three rigs to 1,385. The oil rig count hit a nine-month high of
1,413 eight weeks ago, Baker Hughes data showed. The oil count
is down 47 rigs, or 3.3 percent, from the same week last year.
    Baker Hughes reported horizontal rigs, the type often used
to extract oil or gas from shale, saw their first drop in four
weeks, losing eight this week to 1,065. 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 22 months. The count is down nearly 59 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
    The U.S. Energy Information Administration on Tuesday said
it expected production this year to be up 1 percent from 2012's
levels, which would be the third straight year of record output.

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