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Baker Hughes Confirms a Third Weekly Decline in US Oil and Gas Rigs
10/12/2023![Baker-Hughes-Confirms-a-Third-Weekly-Decline-in-US-Oil-and-Gas-Rigs](https://images2.rextag.com/public/blog/BLOG_Baker Hughes Confirms a Third Weekly Decline in US Oil and Gas Rigs.jpg)
- U.S. energy firms reduce oil and gas rigs for the third consecutive week.
- Baker Hughes reports the lowest rig count since February 2022.
- Oil futures show a modest increase, while gas futures experience a significant drop.
In a recent announcement, energy services firm Baker Hughes stated that U.S. energy companies have decreased the number of operating oil and gas rigs for the third successive week. This development marks the first such consistent reduction since early September.
As of October 6, the count for oil and gas rigs, considered a precursor to future production levels, has seen a decline by four, positioning it at 619. This is the lowest figure recorded since February of the preceding year. The overall rig count has decreased by 143 or 19% when compared to last year's statistics.
Specifically, U.S. oil rigs have declined by five, reaching 497, a figure mirroring that of February 2022. Conversely, gas rigs have shown an uptick of two, bringing the total to 118.
This year has seen U.S. oil futures rise by approximately 3%, following a 7% gain in 2022. On the other hand, U.S. gas futures have witnessed a 26% decrease after enjoying a 20% increment last year.
O&G Production Trends Amid Price Shifts
The continuous rig cut over three quarters is largely attributed to the significant price drop in mid-2022. Even though oil production has returned to levels prior to the pandemic, the growth rate has decelerated, owing to the roughly 12-month duration required for price alterations to influence output modifications.
Gas production has sustained its upward trend, largely due to heightened interest in shale oil drilling, which consequently yields substantial associated gas. This is particularly evident in prolific oilfields such as the Permian Basin situated in West Texas and eastern New Mexico.
However, the recent drop in gas prices has led to a noticeable reduction in output growth. In an effort to optimize oil output, shale companies have concentrated on the most lucrative well sites, implementing extended lateral drilling to enhance well productivity.
Exxon Mobil's Expansion Plans
Exxon Mobil, the leading U.S. oil producer, has officially announced a merger with Pioneer Natural Resources in an all-stock transaction valued at approximately $59.5 billion. The transaction emphasizes ExxonMobil's strategy to expand its presence in the Permian Basin, more than doubling its footprint. The merger brings together Pioneer's over 850,000 net acres in the Midland Basin with ExxonMobil's 570,000 net acres, creating an unparalleled inventory position in the industry. This partnership aims to boost U.S. energy security, accelerate Pioneer’s net zero ambition from 2050 to 2035, and further solidify the company's leadership in sustainable energy production.
Pioneer CEO, Scott Sheffield, highlighted the merger as a monumental step that combines the strengths of both companies, ensuring long-term success and creating tangible value for shareholders1. The collaboration is anticipated to generate significant returns by efficiently harnessing resources, reducing environmental impact, and optimizing production through advanced technologies.
The deal also signifies ExxonMobil's commitment to capital efficiency and enhancing its upstream portfolio. By 2027, it's expected that short-cycle barrels will make up more than 40% of ExxonMobil's total upstream volumes, positioning the company to swiftly adapt to market demands.
About Baker Hughes
Baker Hughes is a premier energy services company, offering advanced technologies and services to oil and gas companies globally. Their comprehensive suite of solutions aids in the exploration, production, and management of hydrocarbon resources, underscoring their commitment to shaping the future of energy.
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Occidental's Asset Cuts After CrownRock's $12 Billion Deal
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Occidental Petroleum is expanding its reach in the Midland Basin and targeting deeper drilling in the Barnett area through its significant $12 billion purchase of CrownRock LP. CrownRock, a collaboration between CrownQuest Operating LLC and Lime Rock Partners, is recognized for its prime land holdings in the Permian Basin. This acquisition brings over 94,000 net acres and 1,700 undeveloped drilling spots in the Midland Basin to Occidental's portfolio.
Occidental, CrownRock Merger Under Regulatory Review: 2024 Update
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CrownRock's 94,000+ net acres acquisition complements Occidental's Midland Basin operations, valued at $12.0 billion. This expansion enhances Occidental's Midland Basin-scale and upgrades its Permian Basin portfolio with ready-to-develop, low-cost assets. The deal is set to add around 170 thousand barrels of oil equivalent per day in 2024, with high-margin, sustainable production.
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The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
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Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.