U.S. OIL RIG COUNT DECLINES FOR EIGHTH CONSECUTIVE WEEK

[Wiljor]

U.S. drillers idled oil rigs for an eighth week as crude prices headed for their longest stretch of declines since 2009.

The oil rig count dropped by 94 this week to a three-year low of 1,223, Baker Hughes Inc. said on its website Friday. Drillers have idled 352 oil rigs in eight weeks. Natural gas rigs increased by three to 319 and one miscellaneous rig was added, bringing the total count down 90 to 1,543.

The slide in U.S. oil rigs over the past three months underscores how deeply the global collapse in oil prices has cut into the industry’s profits, prompting producers to curb spending, drilling contractors to fire thousands and at least one oil-rich county in California to declare a fiscal emergency. Banks including Societe Generale SA have said prices may fall below $40 a barrel as global supplies surge and OPEC resists calls to curb its own output.

“There’s a lot of debate right now about the duration of the current low oil prices,” Ryan Lance, ConocoPhillips’ chief executive officer, said in a conference call Thursday. “We’re assuming that they’ll stay low for 2015, and we’re taking decisive actions.”

West Texas Intermediate for March delivery rose $1 to $45.53 a barrel on the New York Mercantile Exchange at 12:55 p.m. East Coast time. Futures were on track to fall for the seventh straight month, the longest streak of declines since 2009.

OPEC Output

ConocoPhillips, the third-largest U.S. energy producer, said on Thursday that it was cutting its rig count in North Dakota’s prolific Bakken shale formation to three this year. Royal Dutch Shell Plc said in a conference call that same day that it was idling rigs in the Gulf of Mexico and Malaysia. And drilling contractor Helmerich & Payne Inc. said it may cut 2,000 jobs after receiving 22 notices from clients terminating rig contracts early.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of the world’s oil supplies, has meanwhile held its ground after agreeing in November to maintain output targets. Saudi Arabia, the group’s biggest producer, won’t “singlehandedly balance the market in a downturn,” Khalid Al-Falih, Saudi Arabian Oil Co.’s chief executive officer, said at a conference in Riyadh this week.

U.S. oil production has continued to climb, reaching 9.21 million barrels a day in the week ended Jan. 23, the most in weekly data since at least 1983, Energy Information Administration data show.

Continental Resources

Continental Resources Inc., the largest leaseholder in North Dakota’s Bakken shale formation, can weather low oil prices “forever,” the company’s chief executive officer, Harold Hamm, said in an interview at the Argus Americas Crude Summit in Houston on Jan. 28. Prices will recover as early as the first half of this year as producers cut back, he said.

In Kern County, home to three-fourths of California’s oil production, leaders declared a fiscal emergency, a prerequisite to filing for Chapter 9 bankruptcy in California. The collapse in oil prices may cut the government’s property-tax collections by almost 15 percent in the year beginning July 1, according to assistant county administrative officer Nancy Lawson.

“We were looking quite positive before this happened,” Lawson said.

Bloomberg.com