- 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.
