US energy firms this week cut the number of oil and natural gas rigs operating to the lowest since late July as the growth in the rig count and production has slowed despite relatively high energy prices.
The US oil and gas rig count, an early indicator of future output, fell by one to 759 in the week to Sept 9, down for the fifth week in six, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Despite the decline, the rig count was still up 256, or 51%, over this time last year.
US oil rigs fell five to 591 this week, their lowest since mid June, while gas rigs rose four to 166, their highest since August 2019.
With oil prices up about 16% so far this year after soaring 55% in 2021, the total rig count fell in August after rising for a record 24 months in a row.
But even when rising, weekly increases have mostly been in the single digits as many companies focus more on returning money to investors and paying down debt rather than boosting output.
Supply chain constraints and inflationary pressures also mean disappointing oil output gains, chief executives of shale oil producers EOG Resources and Pioneer Natural Resources said this week.
Scott Sheffield, CEO of leading shale producer Pioneer said those limitations are “going to keep people from drilling too much in the Permian,” the largest US oilfield which has supplied most of the American oil gains in recent years.
Sheffield forecasts US oil production will rise around 500,000 barrels per day (bpd) this year, and next year’s gains could fall below that level. His estimate is well below the 800,000 bpd projection for 2023 by the US Energy Information Administration (EIA).
The EIA this week cut its forecast for 2022 oil output to 11.8 million bpd, down 100,000 bpd from a previous forecast. It also lowered its 2023 outlook by 100,000 bpd, to an average 12.6 million bpd.
However, top oilfield services company Schlumberger on Wednesday said North American oil and gas activity was growing at a faster pace than expected, as investments rates soar.
US financial services firm Cowen & Co said the independent exploration and production (E&P) companies it tracks plan to boost spending by about 35% in 2022 versus 2021 after increasing spending about 4% in 2021 versus 2020. (Reporting by Scott DiSavino Editing by Marguerita Choy)