December 15, 2017 / 6:07 PM / a year ago

U.S. oil drillers cut rigs for first week in six -Baker Hughes

    By Scott DiSavino
    Dec 15 (Reuters) - U.S. energy companies this week cut oil
rigs for the first time in six weeks in spite of prices rising
close to their highest in over two years and drillers starting
to boost spending plans for next year.
    The oil rig count fell by four to 747 in the week to Dec.
15, General Electric Co's        Baker Hughes energy services
firm said in its closely followed report on Friday.
   The U.S. rig count, an early indicator of future output, is
still much higher than a year ago when only 510 rigs were active
after energy companies boosted spending plans for 2017 as crude
started recovering from a two-year price crash.
    The increase in U.S. drilling lasted 14 months before
briefly stalling in August, September and October as some
producers trimmed their 2017 spending plans after prices turned
softer over the summer. Energy firms started adding rigs again
in November as crude prices rose.
    So far in 2017, U.S. crude futures        have averaged over
$50 a barrel, easily topping last year's $43.47 average. This
week, futures        traded around $57 a barrel, near their
highest since June 2015.
    Looking ahead, futures were trading near $56 for calendar
2018           and $54 for calendar 2019          .
    Financiers keep pouring cash into the shale oil sector,
providing producers with a path to keep U.S. output rising
through the middle of the next decade.             
    In anticipation of higher prices than in 2016, exploration
and production (E&P) companies increased their spending on U.S.
drilling and completions in 2017 by about 53 percent over 2016,
according to U.S. financial services firm Cowen & Co.
    Cowen said 19 of the roughly 65 E&Ps they track, including
EQT Corp        , have already provided capital expenditure
guidance for 2018 indicating a 13 percent increase in planned
spending over 2017. 
    EQT said on Wednesday it expects to spend $2.4 billion in
2018, the majority of which will be to develop more wells in two
key shale formations in the Appalachian region.             
    Cowen, which has its own U.S. rig count, said it was
"intrigued by a sudden increase in rigs and will keep an eye on
it" but for now still expects a gradual decline in the count in
the fourth quarter of 2017 and in 2018.
    There were 930 oil and natural gas rigs active on Dec. 15,
according to Baker Hughes. The average number of rigs in service
so far in 2017 was 874. That compares with 509 in 2016 and 978
in 2015. Most rigs produce both oil and gas.
    U.S. production is expected to rise to 9.2 million bpd in
2017 and an all-time high of 10.0 million bpd in 2018 from 8.9
million bpd in 2016, according to a federal energy projection in
    U.S. output peaked on an annual basis at 9.6 million bpd in
1970, according to federal energy data.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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