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U.S. rig count drops 8 percent

Total U.S. upstream picture mixed, though No. 1 oil state Texas reports largest drop.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Feb. 5, 2016 at 8:04 AM
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HOUSTON, Feb. 5 (UPI) -- The total number of rigs actively exploring for or producing oil and gas in the United States dropped more than 8 percent, Baker Hughes reports.

In its monthly report for January, Baker Hughes, which provides services for the upstream oil and gas sector, said the U.S. rig count for January was 654, down 8.4 percent from the previous month.

Lower crude oil prices means energy companies have less capital to invest in exploration and production, a trend loosely reflected in rig counts. U.S. upstream player Hess Corp. last week said it was cutting planned spending for exploration and production for the year by 20 percent to $2.4 billion.

For Baker Hughes, fourth quarter revenue was down about 60 percent year-on-year for North American operations alone to $1.1 billion. For the year, the company said it recorded an adjusted net loss of $209 million against net income of $1.8 billion for the previous year.

Recent analysis on production trends in the low oil price era from Wood Mackenzie finds U.S. onshore production to be among the hardest hit areas.

State-by-state data show variances on onshore U.S. basins. In terms of percent, Alaska gained the most with two new rigs. New Mexico lost the most with a 13 percent drop to 26 rigs. By volume, Alaska and Colorado gained the most with two new rigs each. Texas lost the most with a decline of 13 to 281.

Baker Hughes CEO Martin Craighead said the current weakness in crude oil prices meant the prospects were bleak for upstream companies like his. With prices as they are, the global rig count could decline by as much as 30 percent for the year.

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