UPDATE 1-U.S. natgas rig count hits fresh 14-year low -Baker Hughes

Fri Apr 5, 2013 1:57pm EDT

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* Gas-directed rig count slides to new 14-year low
    * Horizontal rig count falls to lowest in nearly 20 months

    NEW YORK, April 5 (Reuters) - The number of rigs drilling
for natural gas in the United States fell this week to the
lowest since May 1999, as producers  continued to pull back from
dry gas drilling despite strong price gains over the last six
weeks.
    The gas-directed rig count, which slid by 14 this week to
375, eclipsed the previous 14-year low of 389 posted last week,
according to data from Houston-based oil services firm Baker
Hughes Inc on Friday.
    Producers have mostly been curbing dry-gas drilling in favor
of more profitable oil and liquids-rich plays such as Eagle Ford
in Texas and Marcellus in Appalachia.
    But a 30 percent run-up in spot gas prices since
mid-February to a 19-month high of $4.124 per million British
thermal units this week has stirred expectations that gas
output, still flowing at or near record highs, could increase in
coming weeks.

    The oil-focused rig count rose by three to near a four-month
high of 1,357 this week, Baker Hughes data showed. The oil count
is up 28 rigs, or 2.1 percent, from the same week last year.
    Baker Hughes also reported that horizontal rigs, the type
often used to extract oil or gas from shale, dropped by 15 this
week to a new 20-month low of 1,084. The horizontal count is
down 9.1 percent from the record high of 1,193 set last May.
    Drilling for natural gas has mostly been in decline for the
last 18 months. The count is down about 60 percent since peaking
in 2011 at 936, but so far production has not shown any clear
signs of slowing.
    The associated gas produced from more profitable shale oil
and shale gas liquids wells has kept dry gas flowing at or near
an all-time high. The U.S. Energy Information Administration
expects marketed gas production in 2013 to hit a record high for
the third straight year.    
    Gas futures prices, which were up about 4 percent at $4.105
just before the Baker Hughes report, climbed to a 19-month
intraday high of $4.124 after the data was released.
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