U.S. energy companies added oil and natural gas drilling rigs this week for the third time in just four weeks. This is because of high oil prices that encourage them to drill more.
Baker Hughes Co, a closely watched report, stated that the oil and gas rig count, which is an indicator of future output, rose by 2 to 770 in the week to Nov. 4.
Baker Hughes stated that this brings the total number of rigs up to 220, or 40%, compared to last year.
U.S. oil production rose by 3 to 613 this Week, its highest level since March 2020. Meanwhile, gas production fell 1 to 155, their lowest point since late July 2022.
The rig count has increased steadily over the last two years but weekly increases have been very low in recent months. Oil production is still below the record levels before the pandemic. Many companies are more concerned with returning money to investors or paying down debt than increasing output.
According to federal energy data, U.S. crude oil production was expected to increase from 11.3 million barrels per day (bpd), in 2021, to 11.8million bpd by 2022 and 12.4million bpd by 2023. This compares to a record 12.3million bpd in 2019.
However, with oil prices up 22% this year after rising 55% in 2021, and the government putting pressure to produce more, several energy companies have stated that they will increase spending in 2022. This is after having cut drilling and completion costs in 2019 and 2020.
Cowen & Co, a U.S. financial service firm, stated that the independent exploration-production (E&P), companies it tracks intend to increase spending by 38% in 2022 versus 20,21 (up from 35% last Wednesday) and spend about 4% more in 2021 versus 2020.
However, some analysts have pointed out that while energy companies do increase their capital expenditures it is not always to increase production. Instead, the money was being used on more expensive equipment and labour costs as a result of rising inflation and supply disruptions.
