UPDATE 2-U.S. natgas rig count resumes climb, up 2 at 958

Fri Apr 30, 2010 11:28pm IST

NEW YORK, April 30 (Reuters) - The number of rigs drilling
for natural gas in the United States rose by two this week to
958, according to a report on Friday by oil services firm Baker
Hughes in Houston.

It was the 17th climb in 18 weeks, after a one-week
reprieve when the rig count declined 17 last week.

Two weeks ago gas drilling rigs were at 973, their highest
level since late February 2009, when there were 1,018 gas rigs
operating.

U.S. natural gas futures on the New York Mercantile
Exchange NGc1 were trading about 5 cents lower at $3.926 per
million British thermal units following the report, little
changed from midday trades in the $3.95 area.
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 For a graphic comparing rig count with cash gas price see:

link.reuters.com/zuz22k
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The U.S. natural gas drilling rig count is up 293, or 44
percent, since bottoming at 665 on July 17, its lowest level
since May 3, 2002, when there were 640 active gas rigs.

While the rig count is well off its peak above 1,600 in
September 2008, it is 217 rigs above the same week last year.

Many gas producers scaled back drilling last year with
credit tight and natural gas cash prices sinking late in the
summer to about $2 per mmBtu, a 7-1/2-year low and down 85
percent from July 2008 highs above $13.

With current gas prices of about $4, down more than 30
percent since early January highs above $6, some analysts
expect to see a slowdown in drilling, noting current prices
were no longer a strong incentive to start new wells.

The break-even point for some key shale basins like
Haynesville in Louisiana and Marcellus in Appalachia ranges
between $3.50 and $4, according to some analysts.

A number of producers have said they would reduce spending
for gas drilling this year and focus instead on more profitable
oil prospects.
 (Reporting by Eileen Moustakis; Editing by Walter Bagley)

Source: http://in.reuters.com/article/oilRpt/idINN3010543620100430