U.S. energy firms this week cut the number of oil and natural gas rigs for a second week in a row as the rig count, an early indicator of future output, has been slow to grow with oil production only seen recovering from pandemic-related cuts next year.
The U.S. oil and gas rig count fell by one to 763 in the week to Aug. 12, energy services firm Baker Hughes Co. said in its closely followed report that day.
That was the first time the rig count fell for two consecutive weeks since August 2020.
Baker Hughes said that puts the total count up 263 rigs, or 53%, over this time last year.
U.S. oil rigs rose three to 601 this week, while gas rigs fell one to 160.
U.S. crude production was on track to rise from 11.3 MMbbl/d in 2021 to 11.9 MMbbl/d in 2022 and 12.7 MMbbl/d in 2023, according to federal energy data. That compares with a record 12.3 MMbbl/d in 2019.
Even though the total rig count has climbed for a record 24 months in a row through July, weekly increases have mostly been in the single digits as many companies focus more on returning money to investors and paying down debt rather than boosting output while facing higher inflationary costs.
Recent capital expenditure increases were "largely related to inflation and not tied to increasing activity," analysts at Morgan Stanley said in a note.
With oil prices up about 22% so far this year after soaring 55% in 2021 – and pressure from the government to produce more – a growing number of energy firms said they plan to boost spending for a second year in a row in 2022 after cutting drilling and completion expenditures in 2019 and 2020.
U.S. financial services firm Cowen & Co. said the independent E&P companies it tracks plan to boost spending by about 35% in 2022 versus 2021 after increasing spending about 4% in 2021 versus 2020.
That follows a drop in capital expenditures of roughly 48% in 2020 and 12% in 2019.
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