U.S. energy companies added oil and natural gas drilling rigs for an unprecedented 16 months. This was in response to rising crude prices, which in recent weeks reached a seven-year high. Some drillers have returned to the wellpad.
In its closely watched report on Wednesday, Baker Hughes Co (BKR.N.) stated that the oil and gas rig count, which is an indicator of future output, rose six per cent to 569 in a shortened week to Nov. 24.
Baker Hughes released the rig count data two days earlier than normal due to the U.S. Thanksgiving holiday.
This brings the total number of rigs up to 249, or 78%, more than last year.
According to Baker Hughes data, November saw a 25% increase in the number of people living in the area. This is the largest monthly increase since January.
U.S. oil production rose to 467 this week, their highest level since April 2020. Meanwhile, gas rigs remained unchanged at 102 for the third consecutive week.
Reinvestment is being resisted by the producers of Shale. According to Rystad Energy data, the rate at which they use cash from operations to drill for oil and gas fell last quarter to a record low. However, these firms also returned cash to shareholders via dividends and stock buybacks.
Rystad reported this week that the third quarter reinvestment rate was 46%. This is lower than the historical average of 130%. Analysts at Rystad warned that reinvestment could continue to fall.
Oddly enough, a larger price rise in natural gas futures – up 102% so far this fiscal year – hasn’t encouraged drillers to look for more gas.
The number of oil rigs increased by 75% over the previous year. However, the number of active gas drilling rigs only rose by 23%.
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