U.S. drilling rig count lowest since 1975 as shale boom fades

Oil and natural gas exploration plunged to an all-time low as the economic and industrial dislocations from the Covid-19 pandemic snuffed out the remnants of the American shale boom.

Drilling in U.S. oil and gas fields retreated by 34 rigs this week to 374, led by a precipitous drop in crude exploration that sank to levels not seen since before the shale-oil revolution kicked off at the beginning of the last decade.

Energy companies are in a full-on retreat as the historic slump in crude markets prompts widespread job cuts, budget reductions, contract cancellations and well shut-ins. In the span of just eight weeks, 53% of active American oil and gas rigs have gone dark, according to data released by Baker Hughes Co. on Friday.

Benchmark American oil futures have dropped 63% from the 2020 high of $65.65 a barrel in early January as the worldwide pandemic slashed demand for petroleum-based fuels at a time when the global surfeit was already expanding. On April 20, the price cratered to minus $40.32.

The historic downturn will drastically reduce capital available to the industry, said Thomas, who leads the world’s second-largest independent explorer by market value. Baker Hughes’ weekly rig tallies have been a key oil-industry metric for decades because of the close correlation between drilling activity and crude production. U.S. oil output has fallen by 1.2 million barrels a day, or 9.2%, since touching 13.1 million in the second week of March. The combined oil- and gas-drilling figure released Friday was unrivaled in data going back to 1975.

U.S. drilling rig count lowest since 1975 as shale boom fades, WorldOil, May 11