Today, global industrial service company Baker Hughes released a report showing that U.S. energy firms added oil and natural gas rigs for the fourth week in a row. In fact, this trend answers to a continuous row of higher oil prices that, in consequence, is prompting some drillers to return to the well pad.
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Therefore, Baker Hughes’ report shows that the oil and gas rig count rose two to 455 in the week to May 21. In fact, this is the highest since the first weeks of the pandemic outbreak, in April 2020.
Optimism with respect to last year’s results – Baker Hughes
Thus, this week the total rig count was up 137 rigs or 43% with respect to last year’s results. It was also up 86% since falling to a record low of 244 in August 2020.
Similarly, U.S. oil rigs rose four to 356 this week, while gas rigs fell one to 99.
Worth noting, the country’s crude futures were trading below $64 a barrel today. In fact, this is putting the contract up about 31 % after they dropped nearly 21% in the same period last year.
Boosting oil drilling spending
According to Baker Hughes, a steadily rising prices row since October 2020 is boosting spending in 2021. This contrasts with the past two years, when many companies were used to cutting drilling and completion expenditures.
However, that spending increase remains small, Baker Hughes notes. Thus, most firms continue to focus on boosting cash flow and reducing debt. Also, they are focused on increasing shareholder returns rather than adding output.
Indeed, Enverus, a provider of energy data with its own rig count, said the number of active rigs in the week dropped 21 to 517 as of May 19.
However, the provider said the “wild week-over-week swing” was likely due to rigs moving between wells. Thus, Enverus noted the rig count in the Bakken in North Dakota rose its highest since last May to 18.
Finally, the U.S. Energy Information Administration also keeps optimistic forecasts regarding oil output. According to the agency, U.S. oil output from seven major shale formations, is expected to climb by 26,000 barrels per day (bpd) in June to 7.73 million bpd. In fact, this includes the Bakken. Accordingly, this would be the first rise in shale formation for the last three months.
