UPDATE 1-Driller Helmerich & Payne sees moderate growth in customer spending for 2023

(Adds details from earnings call)

By Liz Hampton

DENVER, Jan 31 (Reuters) - Oil and gas producer budgets are slated to be "moderately higher" in 2023, drilling contractor Helmerich & Payne said on Tuesday during an earnings call, with activity also anticipated to grow modestly in the coming months.

The company warned that natural gas prices, which have plunged below $3 per million British thermal units (mmBtu), could prompt a shift in drilling work, with some equipment moving to shale regions more heavily focused on oil production.

On Tuesday, U.S. benchmark natural gas prices were trading around $2.7 per mmBtu, their lowest since early 2021. Hydraulic fracturing firm Liberty Energy last week said it would reallocate equipment to more oily areas if there is a pullback on natural gas drilling due to low prices.

Roughly 28 of Helmerich and Payne's 185 active drilling rigs, or 15%, are focused on gas plays and most of those are on term contracts, the company said on Tuesday.

In North America, the company anticipates activating some 16 rigs this year, bringing its total to around 191. It said it lost one rig due to a fire.

The company said it experienced higher costs associated with labor and supplies last year, but anticipates those to stabilize in 2023.

Shares were down about 1% in midmorning trading to $48.12 each.

Helmerich & Payne reported net income of $97.1 million for the quarter ended Dec. 31, 2022, up from a loss of $51.4 million in the same period last year. (Reporting by Liz Hampton in Denver; editing by Jonathan Oatis)