October 27, 2017 / 5:16 PM / a year ago

U.S. oil rig count rises this week but falls for a 3rd mth -Baker Hughes

    Oct 27 (Reuters) - The U.S. rig count fell for a third month
in a row even as drillers added a rig this week for the first
time in October, extending the drilling decline that started
after crude prices fell below $50 a barrel this summer.
    Drillers added one oil rig in the week to Oct. 27, bringing
the total count up to 737, General Electric Co's        Baker
Hughes energy services firm said in its closely followed report
on Friday. RIG-OL-USA-BHI
    For the month, the rig count fell by 13, the biggest decline
since May 2016. It was also the first time since May 2016 that
the number of rigs dropped for a third month in a row.
    The rig count, an early indicator of future output, is still
much higher than a year ago when only 441 rigs were active after
energy companies boosted spending plans in the second half of
2016 as crude recovered from a two-year price crash.
    The recovery in drilling lasted 14 months before stalling in
August, September and October after some producers started
trimming spending plans when prices turned softer over the
summer.
    ConocoPhillips         this week lowered the amount of
capital it expects to spend in 2017 by about 10 percent to $4.5
billion. In 2016, the company's capital expenditures were $4.9
billion.             
    Despite plans to cut spending by some exploration and
production (E&P) companies, U.S. financial services firm Cowen &
Co's capital expenditure tracking increased this week. The 64
E&Ps it tracks planned to increase drilling and completion
spending by an average of 50 percent in 2017 from 2016. That was
up from 49 percent in the prior report.
    That expected 2017 spending increase followed an estimated
48 percent decline in 2016 and a 34 percent decline in 2015,
Cowen said.
    U.S. crude futures        have averaged almost $50 a barrel
so far in 2017, easily topping last year's $43.47 average.
Looking ahead, futures were trading above $53 for the balance of
the year           and calendar 2018          .
    Exxon Mobil Corp         said on Friday it will grow its
Permian rig count from 20 currently to 30 by end of 2018 as it
aims to boost output 45 percent a year through 2020.
            
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week revised slightly
downward their forecast for the total oil and natural gas rig
count, now expecting it to average 874 in 2017, 923 in 2018 and
1,072 in 2019. Last week, it forecast 877 in 2017, 939 in 2018
and 1,087 in 2019.
    That compares with an average of 867 oil and gas rigs so far
in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil
and gas.
    With 909 total oil and gas rigs in operation now, that means
Simmons analysts expect the number of rigs will decline through
the balance of this year before rising next year.
    U.S. production is expected to rise to 9.2 million barrels
per day (bpd) in 2017 and a record 9.9 million bpd in 2018 from
8.9 million bpd in 2016, according to federal energy projections
this month.        
    

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
  
 
 
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