US oilfield service providers expect rig count recovery later this year on high prices (updated)
27/07/2023 19:21
(Adds comments on frac pricing, updates shares)
By Arathy Somasekhar
HOUSTON, July 27 (Reuters) - Oilfield service providers
on Thursday signaled a recovery in rig count, an indicator of
future production, later this year, citing an uptick in oil and
gas prices.
U.S. shale producers slashed drilling and well completions
in the second quarter, cutting demand for equipment and
services. However, with U.S. crude prices CLc1 climbing back
to $80 per barrel, service companies are betting on a recovery
in demand.
"Uncertainty around the macro outlook for crude oil and
natural gas prices maintained an underlying sense of
apprehension in the U.S. drilling market during the quarter,"
said Helmerich & Payne's HP.N chief executive, John Lindsay.
"Recently however, some of this uncertainty has receded, and
we are starting to see signs of optimism on the horizon," he
added.
Lindsay said he expects rig count activity to hit a bottom
in the quarter ending September, and a recovery in the following
quarter.
The upbeat outlook and a better-than-expected profit of
$1.09 per share helped Helmerich & Payne shares rise 5.9% to
$45.19 in afternoon trading.
Rival Patterson-UTI Energy PTEN.O also forecast a rise in
rig count and fracking activity later this and next.
"We believe the industry rig count is near a bottom," said
Andy Hendricks, CEO of Patterson-UTI Energy, adding that the
company expects additional rig releases in the next few weeks
before drilling activity recovers later in the year.
On the pressure pumping side, Hendricks said activity has
already reached a trough in July.
While pressure pumping prices for spot work fell about 30%
in recent months, it should reverse those losses as activity
picks up, Hendricks added.
Nextier Oilfield Solutions NEX.N on Wednesday had also
forecast a recovery in fracking demand next year, adding that a
shortage of equipment could hinder growth in U.S. oil and gas
production.
Patterson-UTI, which is in the process of merging with
Nextier, on Wednesday reported quarterly profit of 45 cents per
share, 1 cent ahead of analysts' estimates.
Patterson-UTI shares were up 2.2% at $15.75 and Nextier
shares were up 0.9% at $11.77 on Thursday afternoon.
(Reporting by Arathy Somasekhar in Houston
Editing by Jonathan Oatis and Matthew Lewis)
((arathy.s@thomsonreuters.com; +1 832 610 7346; Twitter:
@ArathySom;))