U.S. energy firms this week added oil and natural gas rigs for the second time in the past three weeks as a recovery in oil prices from historic coronavirus-linked lows prompted some drillers to return to the wellpad.
The oil and gas rig count, an early indicator of future production, rose two to 256 in the week to Sept. 4, energy services firm Baker Hughes Co. said in its weekly report.
That was 642 rigs, or 71.5%, below this time last year.
That total rig count fell to a record low of 244 rigs during the week ended Aug. 14.
U.S. oil rigs rose one to 181 this week, while gas rigs remained unchanged at 72, according to Baker Hughes data.
Even though U.S. oil prices are still down about 34% since the start of the year due to coronavirus demand destruction, U.S. crude futures have gained 140% over the past four months to below $40 per barrel Sept. 4 mostly on hopes global economies and energy demand will snap back as governments lift lockdowns.
Analysts said those higher oil prices have encouraged some energy firms to start adding units.
Most firms, however, still plan to keep cutting costs.
U.S. financial services firm Cowen & Co. said the 45 independent E&P companies it tracks plan to slash spending by about 47% in 2020 versus 2019. That follows a capex reduction of roughly 9% in 2019 and an increase of around 23% in 2018.
Cowen also said that some E&Ps issued early estimates for 2021 that so far point to 8% drop in spending next year versus 2020.
The Railroad Commission of Texas plugged 1,477 abandoned oil and gas wells in fiscal-year 2020, which ended on Aug. 31, exceeding its target for the fourth straight year.
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The oil and gas rig count, an early indicator of future output, rose six to 261 in the week to Sep. 25, energy services firm Baker Hughes said in its closely followed report.