May 17, 2013 / 5:41 PM / 5 years ago

UPDATE 1-US natgas rig count edges up from 18-yr low -Baker Hughes

* Gas-directed rig count climbs slightly from 18-year low
    * Horizontal rigs fall for first time in three weeks
    * Oil rig count drops after three straight weekly gains

    NEW YORK, May 17 (Reuters) - The number of rigs drilling for
natural gas in the United States rose this week by four after
posting an 18-year low the previous week, stirring concerns that
some producers were wading in to dry gas drilling.
    The gas-directed rig count edged up to 354 this week after
sliding to 350 the previous week, its lowest since June 1995,
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 gas prices, which hit a 21-month high of $4.444 per
million British thermal units just over two weeks ago, may have
offered some producers a hedging opportunity that could keep dry
gas output flowing. Prices this week have slipped to the $3.90s.

    The oil-focused rig count fell for the first time in four
weeks, dropping by four to 1,408 after posting an eight-month
high the previous week, Baker Hughes data showed. The oil count
is up 26 rigs, or 2 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, fell by three this
week to 1,096. The horizontal count is down 8.1 percent from the
record high of 1,193 set in May 2012.
    Drilling for natural gas has mostly been in decline for the
last 18 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 more profitable shale oil
and shale gas liquids wells has kept dry gas flowing at a brisk
    The U.S. Energy Information Administration recently raised
its estimate for domestic natural gas production in 2013,
expecting output this year to be up about 1 percent from last
year. If realized, it would be the third straight year of record
    Gas futures prices, which were up about 3 cents in the 
$3.96 area just before the Baker Hughes data was released,
climbed about 3 cents after the report.
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