U.S. energy companies added the most natural gas and oil rigs this week than April, as rising oil prices encourage more drillers to return 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 from 13 to 601 in a week to January 14, its highest level since April 2020.
The total count increased by 228, or 61%, compared to last year.
U.S. oil production rose 11 to 492 last week, their highest level since April 2020. Meanwhile, gas rigs rose two and 109 this week, their highest levels since March 2020.
Oil rally to continue in 2022 as demand outstrips supply, analysts say
Six rigs were added to the Eagle Ford in South Texas this week. This is the most for any basin and brings its total to 50. Its highest level since April 2020. Three to 52 rigs were added to the Haynesville Shale, which was located in Texas, Louisiana, and Arkansas, bringing it up to its highest level since November 2019.
U.S. crude oil futures traded at $84 per barrel Friday, marking the beginning of a four-week streak for the contract.
Oil prices are up around 12% this year, after rising 55% in 2021. With a growing number of exploration and production (E&P), firms plan to increase spending for the second consecutive year in 2022.
Although the rig count has steadily increased for 17 consecutive months, U.S. oil production fell in 2021 due to many energy companies focusing more on returning money than increasing output.
The coronavirus pandemic in the United States slowed oil production and prices. It is now only expected to surpass 2019’s record of 12.3 million barrels per daily (bpd). According to the government, production will increase from 11.2 million barrels per day in 2021 to 11.8 million bpd by 2022 and a 12.4million bpd by 2023.
To maintain current oil volumes in 2022 and beyond, the rig activity for the five largest U.S. plays will need to rise by approximately 13 weekly during the next eight weeks. This is compared to the average rig gains of around two over the past four weeks.
The bank stated that it believes drilling activity will continue to be a limit on U.S. growth. This is a positive for both the commodity and large-cap E&Ps.
