According to a recent report from energy services company Baker Hughes, U.S. energy corporations have increased the number of oil rigs this week at the highest rate since March.
This marks the first growth in the oil and gas rig count in a month. As of the week ending Oct. 13, the rig count climbed by three, reaching 622. Although there was a rise this week, the overall count remains 19% (or 147 rigs) lower than the same period last year.
Oil rigs experienced an increase of four, totalling 501, whereas gas rigs decreased by one, settling at 117.
So far this year, U.S. oil futures have risen by approximately 8%, following a 7% increase in 2022. In contrast, U.S. gas futures have seen a decline of about 28% this year after a 20% increase the previous year.
Exxon Mobil has entered into an agreement to acquire its U.S. counterpart, Pioneer Natural Resources, in an all-stock transaction valued at $59.5 billion. This move is set to position it as the top producer in the Permian basin, the U.S.’s largest oilfield.
Analysts from energy consultancy Tudor Pickering Holt & Co. suggest that for Exxon to boost its production in the Permian, there may be a need to augment the combined count of around 37 rigs that Exxon and Pioneer currently operate.
However, East Daley Analytics, another energy consultancy, has pointed out that recent mergers and acquisitions seem to be decelerating rig activities in the Permian Basin.
Despite U.S. drillers reducing the number of rigs this year, crude production surged to a record high of 13.2 million barrels per day last week. This surpassed the earlier peak from March 2020, before the global oil demand plummeted due to the COVID-19 pandemic, as per government figures.
U.S. Energy Information Administration’s (EIA) October forecasts suggest that, buoyed by higher oil prices, U.S. crude production is set to increase from 11.9 million bpd in 2022 to 12.9 million bpd in 2023, reaching 13.1 million bpd by 2024. This is in contrast to the 2019 record of 12.3 million bpd.
Furthermore, even with gas prices dropping, U.S. gas production is predicted to grow from a 2022 high of 99.6 billion cubic feet per day (bcfd) to 103.7 bcfd in 2023 and 105.1 bcfd by 2024, based on EIA’s October estimates.
