UPDATE 1-U.S. natgas rig count climbs from 18-year low -Baker Hughes

Fri Jun 28, 2013 1:55pm EDT

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* Gas-directed rig count edges up from 18-year low
    * Horizontal rigs slip for sixth time in seven weeks
    * Oil rig count retreats for a second week

    NEW YORK, June 28 (Reuters) - The number of rigs drilling
for natural gas in the United States rose by four this week
after posting an 18-year low the previous week, data from
Houston-based Baker Hughes showed on Friday.
    The gas-directed rig count edged up to 353 this week after
dropping last week to its lowest since June 1995. It was the
first gas-directed rig count gain in six weeks.
    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.
    Gas prices hit a 21-month high of $4.444 per million British
thermal units in early May and stirred concerns that producer
hedging at higher prices could keep dry gas output flowing.
    But gas futures prices on Friday, which were off just 0.5
cent at $3.577 per mmBtu just before the data was released at 1
p.m. EDT, slipped about a penny after the report. Front-month
futures hit a 3-1/2-month low of $3.526 on Friday.

    The oil-focused rig count fell by 15 this week to 1,390, its
second straight decline after posting a nine-month high of 1,413
two weeks ago, Baker Hughes data showed. The oil count is down
31 rigs from the same week last year.
    Baker Hughes reported horizontal rigs, the type often used
to extract oil or gas from shale, lost ground for the sixth time
in seven weeks, shedding 12 to 1,067. The horizontal count is
down nearly 11 percent from the record high of 1,193 set in May
2012.
    Drilling for natural gas has mostly been in decline for the
last 20 months. The count is down about 62 percent since peaking
in October 2011 at 936, but so far production has not slowed
much, if at all, from the record high hit last year.
    The associated gas produced from shale oil and shale gas
liquids wells has kept dry gas flowing at a brisk rate. The U.S.
Energy Information Administration still expects gas output in
2013 to post a record high for a third year.
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