Last week, U.S. energy companies added oil and natural gas drilling rigs for the eighth consecutive week. This was due to high prices and prompting by the federal government, drillers returned to the wellpad.
Baker Hughes Co, an energy services company, reported that the oil and gas rig count, which is an indicator of future output, rose nine percent to 714 in week to May 13. This was its highest level since March 2020.
Baker Hughes stated that this brings the total number of rigs up to 261, or 58%, compared with last year.
U.S. oil and gas rigs rose six percent to 563 this week, their highest level since March 2020. Gas rigs grew three to 149, their highest levels since September 2019.
Although the total rig count rose for 21 consecutive months through April, weekly gains have mainly been in single figures. Oil production is still well below pre-pandemic record levels. Many companies are more focused on returning money to investors or paying down debt than increasing output.
The U.S. government has been urging drillers to produce more oil to lower domestic prices and to help allies reduce their dependence on Russia since the invasion of Ukraine on February 24th.
U.S. crude oil production has not returned to its record levels of 12.3 million barrels per daily (bpd) in 2019, prior to the pandemic. It is expected to rise from 11.2million bpd by 2021 to 11.9million bpd in 2022 and 12.9million bpd in 2023, according to the government.
However, oil prices are up 47% this year after rising 55% in 2021. A growing number of energy companies have stated that they will increase spending in 2022 for the second consecutive year.
Cowen & Co, a U.S. financial service firm, stated that the independent exploration-production (E&P), companies it tracks have plans to increase spending by around 30% in 2022 versus 20,21 after increasing spending by approximately 4% in 2021 versus 2010.
This is due to a decrease in capital expenditures of approximately 48% in 2020, and 12% in 2019, respectively.
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