U.S. drillers add oil & gas rigs for record 18th month -Baker Hughes
U.S. energy companies added oil and gas rigs for an 18th consecutive month after increasing the number of rigs this week as oil prices hit their highest level since 2014, encouraging more drillers to return to the well.
The number of oil and gas rigs, an early indicator of future production, rose by six to 610 in the week of Jan. 28, its highest level since April 2020, energy services firm Baker said Friday. Hughes Co in its closely followed report. , ,
In January, the number of oil and gas rigs increased by 24.
Even as the number of rigs rose for a record 18 consecutive months, analysts noted that U.S. production fell in 2021 as many energy companies focused more on returning money to investors rather than on increasing production.
Baker Hughes said the total number increased by 226 platforms, or 59%, compared to the same period last year.
US oil rigs rose four to 495 this week, their highest level since April 2020, and jumped 15 in January, rising for a 17th straight month, which was the longest streak of gains since January 2011 .
Gas rigs rose two to 115 this week, their highest since January 2020, and rose seven in January, their biggest monthly gain since December 2018.
U.S. crude futures were trading at around $87 a barrel this week, their highest since October 2014, putting the contract on track to rise for a sixth consecutive week for the first time since October 2021.
With oil prices up around 16% so far this year after climbing 55% in 2021, a growing number of energy companies have raised their spending plans for a second straight year in 2022 after cutting costs. drilling and completion expenditures in 2019 and 2020.
The increase in spending in 2021, however, was small and much of it went towards completing wells drilled in the past, known in the industry as drilled but uncompleted (DUC) wells.
Analysts said the industry needs to drill new wells in the future, however, as the number of available DUCs is rapidly dwindling.
In its latest report, the government said CIDs in the largest shale basins in December fell from 214 to 4,616, their lowest since March 2014. read more
“We believe the uncompleted drilled inventory is no longer sufficient to sustain the current completion rate, as inventory to overall production is already below half of 2018-2019 average levels,” said Mizuho analysts this week in a note.
They said drilling activity in the five largest U.S. oil plays is expected to increase by about 12 per week over the next eight weeks to reach a sustainable plateau to maintain current oil volumes in 2022, against average gains. drilling of about one in the past four weeks.