U.S. energy firms this week increased the number of oil rigs operating for the second time in three weeks after oil prices soared over 18% in January.
Companies added seven oil rigs in the week to Feb. 8, bringing the total count to 854, Baker Hughes, a GE company (NYSE: BHGE), said in its weekly report.
The U.S. rig count, an early indicator of future output, is still higher than a year ago when 791 rigs were active after energy companies boosted spending in 2018 to capture higher prices that year.
In 2019, however, some drillers have said they plan to remove rigs due in part to forecasts for lower crude prices than last year.
Liberty Oilfield Services Inc. this week estimated roughly 20% of the hydraulic fracturing fleets that were active in mid-2018 have now been idled or are being idled.
U.S. crude futures were trading slightly under $53 per barrel on Feb. 8, down about 5% for the week on worries of a global economic slowdown.
Looking ahead, crude futures were trading around $54 per barrel for the balance of 2019 and $55 for calendar 2020. The U.S. Energy Information Administration (EIA) projected West Texas Intermediate spot crude would average $54.19 in 2019 and $60.76 in 2020, down from an average of $65.06 in 2018.
U.S. financial services firm Cowen & Co. said this week that early indications from the E&P companies it tracks point to a 1% increase in capex for drilling and completions in 2019.
Cowen noted larger spenders, like BP Plc and Chevron Corp, appear to be more resilient and have spending up year-over-year, while smaller, gas-exposed operators are generally down.
In total, Cowen said those E&P companies spent about $88.7 billion in 2018.
There were 1,049 oil and natural gas rigs active in the United States this week, according to Baker Hughes. Most rigs produce both oil and gas.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and gas rig count will fall from 1,032 in 2018 to 999 in 2019 before rising to 1,087 in 2020. That was the same as its forecast last week.
Alaska North Slope oil production has slipped below 500,000 barrels per day and will decline further in coming years, according to the latest forecast released by the state Department of Revenue.
Mexican state oil company Pemex said on Dec. 6 it has discovered a deposit in southeastern Mexico that could yield 500 million barrels of crude, calling it the largest such finding in more than 30 years.
The deal would create the largest pure-play northern Midland Basin E&P with a 73,000-net-acre position and 12,000 boe/d of production that is expected to more than double through 2020.