UPDATE 1-U.S. natgas rig count edges up from 14-year low -Baker Hughes

Fri Apr 12, 2013 1:40pm EDT

Related Topics

* Gas-directed rig count climbs slightly after 14-year low
    * Horizontal rig count gains following 20-month low last
week
    * Oil rig count rises to near 5-month high

    NEW YORK, April 12 (Reuters) - The number of rigs drilling
for natural gas in the United States rose this week by two after
posting a 14-year low the previous week, raising prospects that
the recent rally in gas prices might be tempting some producers
to bring on more supply.
    The gas-directed rig count edged up to 377 this week after
sliding to 375 the previous week, its lowest since May 1999,
data from Houston-based Baker Hughes showed 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 35 percent run-up in spot gas prices since
mid-February, to a 20-month high of $4.249 per million British
thermal units this week, has stirred expectations that gas
output, still flowing near record highs, could increase in
coming weeks.

    The oil-focused rig count jumped by 30 to near a five-month
high of 1,387 this week, Baker Hughes data showed. The oil count
is up 65 rigs, or 4.9 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, climbed by 18 this
week to 1,102 after dipping to a 20-month low last week. The
horizontal count is down 7.6 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 to edge up slightly in 2013 to
its third straight yearly record.
    Gas futures prices, which were up about 2 percent at $4.23
just before the Baker Hughes report, climbed to a 20-month
intraday high of $4.249 after the rig data was released.
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