U.S. energy companies added oil and natural gas drilling rigs this week as oil prices remained near their seven-year highs. This prompted some drillers to return back to the wellpad.
Baker Hughes Co, an energy services company, stated that the oil and gas rig count, which is an indicator of future output, rose six per cent to 550 in a week to Nov. 5. This was its highest level since April 2020.
The total number of rigs was up 250, or 83%, compared to last year.
U.S. oil production rose six to 450 this week, their highest level since April 2020. Gas rigs remained the same at 100.
U.S. crude oil futures opened the week at $81 per barrel, their highest level since 2014. This is after OPEC+ producers rejected a U.S. request to pump more oil. [O/R]
Despite oil prices rising by 67% this year, some energy companies have not increased their spending to increase production in 2021. Instead, they focus on increasing cash flow and reducing debt to maximize shareholder returns.
According to executives, the decision by U.S. shale producers this year to not pump more oil despite rising prices could signal that the end is near.
Several large oil companies, such as BP Plc and Chevron Corp, plan to increase production of shale spending in the next year.
Cowen & Co, a U.S. financial services company, stated that the independent exploration and production companies it tracks expect to increase their spending by about 4% in 2021 versus the 2020s and 11% in 2022 versus the 2021s for the dozen or so firms who have already released estimates for next year.
This follows capex cuts of approximately 48% in 2020, and 12% in 2019, respectively.
Enverus, a data provider that publishes its own rig counts data, stated that drillers added eight new rigs during the week to Nov. 3. Most of the increase was in Texas’ Permian Shale in Texas and New Mexico.
Enverus stated that Occidental Petroleum Corp has added two rigs to the Permian from mid-October. It now has 14 rigs and is the second-most active operator in this play. Pioneer Natural Resources Co added one in the past week. Pioneer Natural Resources Co has 25 rigs.
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