Saturday, April 17, 2010

Rig Count Up and Growing Again

NEW YORK, April 16 (Reuters) - The number of rigs drilling for natural gas in the United States climbed 14 this week to a 14-month high of 973, according to a report on Friday by oil services firm Baker Hughes in Houston.
It was the 16th straight weekly gain and puts the gas rig count at its highest level since Feb. 20, 2009, when there were 1,018 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded by 308 rigs, or 46 percent, since bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
While the rig count is still well off its peak above 1,600 in September 2008, it now stands at 213 rigs, or 28 percent, above the same week last year.
Many gas producers scaled back drilling early last year with credit tight and natural gas cash prices sinking late last summer to about $2 per million British thermal units, a 7-1/2 year low and down 85 percent from July 2008 highs above $13.
With current gas prices of about $4, down more than 30 percent since early January highs above $6, some analysts expect to see a slowdown in drilling, noting current prices were no longer a strong incentive to start new wells.
The break-even point for some key shale basins like Haynesville in Louisiana and Marcellus in Appalachia ranges between $3.50 and $4, according to some analysts.

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