Oil Drilling Shrinks to 15-Year Low With Shale Spending Falling

Oil Drilling Shrinks to 15-Year Low With Shale Spending Falling
imageStock Markets6 hours ago (Aug 07, 2020 01:27PM ET)

(C) Reuters. Oil Drilling Shrinks to 15-Year Low With Shale Spending Falling

(Bloomberg) — Drillers cut exploration in U.S. oil fields to a 15-year low as some of America’s most prolific shale explorers vowed to show restraint amid a stabilization in oil prices.

The number of active oil rigs in the U.S. fell by four to 176, the lowest since 2005, according to Baker Hughes Co. data released Friday. Beyond the addition of a single rig two weeks ago, explorers have been shutting off rigs for four and half months.

Explorers are channeling cash into dividends and other shareholder-friendly initiatives at the expense of drilling to appease investors fed up with years of poor returns.

“North American E&Ps are in a battle for investment relevance, not a battle for global market share,” Matt Gallagher, chief executive officer at Parsley Energy (NYSE:PE) Inc., told analysts during a conference call this week. “Allocating growth capital into a global market with artificially constrained supply is a trap our industry has fallen into time and time again.”

Worldwide lockdowns to prevent the spread of Covid-19 had a devastating impact on crude demand at a time when shale explorers were already struggling with too much debt and restive shareholders. While benchmark U.S. oil futures have roughly doubled to $40 a barrel since the start of May, prices are still down by more than 30% for the year.

The rig count is a closely watched metric because it’s long been considered indicative of future crude production. The relationship is imperfect, however, because of the time lag between drilling a well and commencing production, as well as other factors such as the turning off of existing wells in response to price movements.

(C)2020 Bloomberg L.P.

Oil Drilling Shrinks to 15-Year Low With Shale Spending Falling

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published. Required fields are marked *