Weak oil prices threaten after strong US first half drilling

07/02/2012
Sagging crude oil prices have joined anemic natural gas prices to cloud the outlook for US and Canada drilling in the rest of 2012. As so many operators have steered capital spending away from dry gas drilling towards plays in formations with predominately oil and NGL, liquids production has risen rapidly, helping to depress liquids prices. Rig activity in the US was 12.4% higher in the first half of 2012 than the same period of 2011 (Table 1), but if the drop in oil prices persists operators could begin drilling fewer wells later this year. Continued drilling to hold leases in the face of lower oil prices, as happened with the shale gas plays, is also possible. The American Petroleum In...
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