US rig count up 20 to 588
Since May, when U.S. crude prices hit $50 a barrel, drillers have added rigs in 22 of 25 weeks, with 155 additional oil rigs over that period.
Almost two-thirds of the rigs added since May, or 92, were in the Permian basin in west Texas and eastern New Mexico, bringing the total there up to 229, the most since October 2015.
As crude prices collapsed from over $107 a barrel in June 2014 to near $26 in February 2016, the number of oil rigs plunged from a record high of 1,609 in October 2014 to a six-year low of 316 in May 2016.
“You’re starting to see a little bit of light at the end of the tunnel,” Ryan Lance, chief executive of ConocoPhillips , the largest independent U.S. oil producer, told Reuters last week. “We’re beginning to put capital back to work, but we’re being cautious.”
Futures were trading near $49 a barrel for calendar 2017 and near $51 for calendar 2018. “Natural gas and oil drilling activity should end the year within a few rigs of 600,” James Williams, president of energy consultant WTRG Economics in Arkansas, said this week in a note.
The combined oil and gas rig count was 588 in the week ended Nov. 18, according to Baker Hughes data. Most wells produce both oil and gas.
Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 18 exploration and production (E&P) companies, including Occidental Petroleum Corp and ConocoPhillips, planned to increase spending by an average of 39 percent in 2017 over 2016.
Cowen said that forecast 2017 increase followed an estimated 48 percent decline in 2016 and a 35 percent decline in 2015 for the 65 E&P companies it tracks.
That increased spending should boost the total number of oil and gas rigs to a forecast average of 634 in 2017 and 732 in 2018 from a projected 514 in 2016, Cowen said.
That compares with an average of 978 oil and gas rigs active in 2015, according to Baker Hughes data.
(Reporting by Scott DiSavino; Editing by Marguerita Choy and David Gregorio)