By Arathy Somasekhar

HOUSTON, March 10 (Reuters) - U.S. oil and gas producers

are unlikely to increase spending this year and output increases

will primarily come from improved efficiencies rather than new

drilling, Baker Hughes ( BKR ) Chief Executive Lorenzo Simonelli

said on Monday.

The outlook comes as U.S. President Donald Trump's

administration has repeatedly exhorted the industry to "Drill,

baby, drill," to maximize oil and gas production and reduce

consumer energy costs.

Still, oil prices have fallen this year and many producers

remain focused on capital discipline over uninhibited drilling.

Capital spending by oil and gas companies will be limited by

the wave of consolidation that swept the industry in recent

years, Simonelli said on the sidelines of the CERAWeek

conference by S&P Global in Houston.

"There's a dislocation between the rig count and

production, just driven by the efficiencies of more modern rigs,

as well as then the production efficiencies," he said.

U.S. crude oil futures have eased to less than $67 a

barrel in recent weeks, raising fears that the producers might

pull back on drilling. Some companies, including Chevron ( CVX )

and rival SLB, have announced plans to restructure and

lay off staff.

Baker Hughes ( BKR ) does not expect to restructure or reduce

its workforce currently, Simonelli said.

Large producers have not yet indicated any changes to

their capital spending plans despite easing oil prices,

Simonelli said. Smaller producers will react quicker to price

inflections, he added.

The company also expects any impact from Trump's tariff

proposals to be manageable and mitigated, Simonelli said.