By March 31, 2017 0 Comments Read More →

Rig count rises, US drillers add most oil rigs in a quarter since 2011 Q2: Baker Hughes

rig count

The US rig count rose for the 11th straight week, according to Baker Hughes. Nabors photo.

Oil rig count up by 10 to 662

The US rig count rose for the 11th straight week, according to the Baker Hughes weekly report.  The quarterly increase in the count is the biggest since Q2, 2011 as energy companies boost spending on new production.

According to the report, US drillers added 10 oil rigs in the week ending March 31, bringing the total rig count to 662, the highest since September, 2015.

At this time last year, there were 362 operational rigs in the United States.

Meanwhile in Canada, Baker Hughes reports the rig count fell by 15 oil rigs and 14 less gas rigs.  Despite the drop, the Canadian rig count is up 106 rigs over this time last year.

In the first quarter of this year, US drillers have added 137 rigs, the largest increase since drillers activated a record 152 rigs in the second quarter of 2011.

The increase in the rig count comes at a time when US crude futures collapsed this month to levels last seen last November when OPEC made the decision to reduce supply by cutting production.

On Friday, US crude futures fell to around $50/barrel, putting the contract on track for its worst quarter since 2015.  Investors are concerned that growing US supplies are undermining the OPEC supply cut pact.

Drillers have added a total of 346 rigs in the past 44 weeks, the biggest recovery since the global oil glut slammed the market for over two years beginning in mid 2014.

Energy prices are expected to climb and analysts are projecting US energy firms will boost spending on drilling and increase oil and gas production from shale fields in the coming years.

Futures for the balance of 2017 were trading over $51/barrel, while calendar 2018 was almost at $52/barrel.

Reuters reported this week, analysts at Simmons & Co along with energy specialists at Piper Jaffray, forecast the total oil and gas rig count would average 842 in 2017, 968 in 2018 and 1,079 in 2019.  Most wells produce oil and gas.

According to Baker Hughes, that compares with an average of 742 so far in 2017, 509 in 2016 and 978 in 2015.

 

Cowen & Co analysts said in a note this week that its capital expenditure tracking showed 57 exploration and production companies planned to increase spending by an average of 50 per cent in 2017 over 2016.

In 2016, Cowen & Co said of the 64 E & P companies it tracks, it estimated a 48 per cent decline in spending in 2016 and a 34 percent drop in 2015.

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