U.S. energy companies added oil rigs for a second week in a row as crude prices hovered near their highest levels since 2014, prompting drillers to return to the well pad.
Drillers added six oil rigs in the week to Feb. 2, bringing the total count up to 765, the highest level since August 2017, Baker Hughes, a GE company, said in its weekly report.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 583 rigs were active after energy companies started to boost spending in mid-2016 as crude were recovering from a two-year price crash.
U.S. crude futures traded around $65 per barrel this week, near their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $63 for the balance of 2018 and $58 for calendar 2019.
In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co. said 30 of the roughly 65 E&Ps they track, including Hess Corp., have already provided capex guidance indicating a 5% increase in planned spending over 2017.
Hess said it would spend $2.1 billion in 2018 mostly in North Dakota and Guyana, keeping its capital budget unchanged form 2017.
Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53% over what they planned to spend in 2016.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, this week slightly increased their forecast the total oil and natural gas rig count to an average of 1,006 in 2018 and 1,131 in 2019. Two weeks ago, they forecast 1,004 in 2018 and 1,128 in 2019.
There were 946 oil and natural gas rigs active on Feb 2. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
The U.S. Energy Information Administration in January projected U.S. production would rise to a record high annual average of 10.3 million barrels per day (MMbbl/d) in 2018 and 10.9 MMbbl/d in 2019, up from 9.3 MMbbl/d in 2017.
The current all-time U.S. output annual peak was in 1970 at 9.6 MMbbl/d, according to federal energy data.
Recommended Reading
Crackin’ It at Kraken: Inside the Bakken’s Ramped-up Private E&P
2024-07-24 - Kayne Anderson-backed Kraken Resources is producing more than 80,000 boe/d today and has a new Fitch Ratings credit score to take to the M&A bank.
Powder in the Hole: Devon May Fire up its PRB in Coming Years
2024-08-23 - Devon Energy is perfecting its spacing and completion recipe in Wyoming’s Powder River Basin play to possibly unleash full-field development later this decade.
Baytex Energy Joins Eagle Ford Shale’s Refrac Rally
2024-07-28 - Canadian operator Baytex Energy joins a growing number of E&Ps touting refrac projects in the Eagle Ford Shale.
CNOOC’s Bohai Bay Well Achieves High Yield
2024-07-11 - CNOOC’s Bozhong 19-6 Condensate Gas Field D1 well, the first ultra-deep well in China’s Bohai Bay, is currently producing approximately 6,300 boe/d.
Talos Buys Interests in Monument GoM Development
2024-08-13 - Talos Energy acquired a 21.4% interest in Monument in the U.S. Gulf of Mexico for $32 million in the second quarter. First production of up to 30,000 gross boe/d is expected by late 2026.