(Reuters) – U.S. energy firms this week cut the number of oil and natural gas rigs operating, the first reduction in six weeks, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by two to 547 in the week to October 10.
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Baker Hughes said this week’s decline puts the total rig count down 39 rigs, or 7% below this time last year.
Baker Hughes said oil rigs fell by four to 418 this week, while gas rigs rose by two to 120, their highest since August.
In the Permian Basin in West Texas and eastern New Mexico, the biggest U.S. oil-producing shale formation, the rig count fell by one this week to 250, the lowest since September 2021.
In Texas, meanwhile, the rig count dropped by six this week to 238, also the lowest since September 2021.
The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output. The independent exploration and production, or E&P, companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 4% in 2025 from levels seen in 2024.
That compares with roughly flat year-over-year spending in 2024, increases of 27% in 2023, 40% in 2022, and 4% in 2021. Even though analysts forecast U.S. spot crude prices would decline for a third straight year in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.5 million bpd in 2025.
On the gas side, EIA projected a 56% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020. EIA projected gas output would rise to 107.1 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.
Reporting by Scott DiSavino; Editing by David Gregorio
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