Lagos — U.S. energy firms this week reduced the number of oil rigs operating for a third week in a row after drilling slowed for nine straight months as independent producers cut spending by about 10% this year.
Drillers cut four oil rigs in the week to Sept. 6, bringing the total count down to 738, the lowest since November 2017, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
In the same week a year ago, there were 860 active rigs.
The oil rig count, an early indicator of future output, has declined over a record-tying nine months as producers and their suppliers are cutting budgets, staff and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.
The slowdown in drilling is spurring cost-cutting in oilfield services, including staff cuts and restructurings at top firms Schlumberger NV and Halliburton Co.
Schlumberger plans a writedown yet to be determined this quarter, noting its results in North America have been “under significant pressure,” Chief Executive Olivier Le Peuch said on Wednesday.
The newly-appointed CEO outlined his vision for the world’s largest oilfield services company, vowing to exit unprofitable businesses, restructure some units and focus on returns.
Halliburton CEO Jeff Miller told investors on Wednesday that slowing growth in the maturing U.S. shale industry and spending cuts by oil and gas customers will lead to a consolidation of oilfield-service suppliers.
Shale pioneer Mark Papa, CEO of Centennial Resource Development Inc, said Tuesday that he expects U.S. oil output will grow by 700,000 barrels per day in 2020, which is slower than government estimates, due to lower crude oil prices, capital constraints imposed by Wall Street investors demanding fiscal discipline and well spacing issues.
The U.S. Energy Information Administration (EIA) projected U.S. oil production would rise to 12.27 million bpd in 2019 from a record 10.99 million bpd in 2018.
U.S. crude futures traded around $56 per barrel on Friday, putting the contract on track to rise for a second week in a row after Beijing and Washington agreed to hold high-level talks in early October, cheering investors hoping for an end to a trade war between the world’s two biggest economies.
Looking ahead, U.S. crude futures were trading above $56 a barrel for the balance of 2019 and below $54 in calendar 2020.
U.S. financial services firm Cowen & Co this week said that projections from the exploration and production (E&P) companies it tracks point to a 5% decline in capital expenditures for drilling and completions in 2019 versus 2018.
Cowen said independent producers expect to spend about 11% less in 2019, while major oil companies plan to spend about 16% more.
In total, Cowen said all of the E&P companies it tracks that have reported plan to spend about $80.5 billion in 2019 versus $84.6 billion in 2018.
*Scott DiSavino; Editing: Marguerita Choy – Reuters