January 26, 2018 / 6:39 PM / a year ago

UPDATE 1-U.S. drillers add most oil rigs in a week since March -Baker Hughes

 (Adds Permian oil rig additions)
    Jan 26 (Reuters) - U.S. energy companies added 12 oil rigs
this week, the biggest weekly increase since March, as crude
prices hovered near their highest levels since 2014, prompting
drillers to return to the well pad. 
    Drillers boosted the oil rig count to 759 in the week to
Jan. 26, the highest level since September, General Electric
Co's        Baker Hughes energy services firm said in its
closely followed report on Friday. RIG-OL-USA-BHI
    More than half of those oil rigs were located in the Permian
basin in west Texas and eastern New Mexico where the number of
active units increased by 18 this week to 427, the most since
January 2015.
    That was the biggest one-week increase in rigs in the
Permian since November 2013.
    Those rigs were expected to help boost oil output in the
Permian to a record high near 2.9 million barrels per day in
February, according to federal projections, representing about
30 percent of total U.S. oil production.
    The total U.S. oil rig count, an early indicator of future
output, is much higher than a year ago when only 566 rigs were
active after energy companies started to boost spending in mid
2016 as crude started recovering from a two-year price crash.
    U.S. crude futures        were trading around $66 a barrel,
after hitting $66.66 on Thursday, the highest since December
2014. That compares with averages of $50.85 in 2017 and $43.47
in 2016.
    Looking ahead, futures were trading around $64 for the
balance of 2018           and $59 for calendar 2019          .
    In anticipation of higher prices in 2018 than 2017, U.S.
financial services firm Cowen & Co said 26 of the roughly 65
E&Ps they track, including EP Energy Corp        , have already
provided capital expenditure guidance for 2018 indicating a 7
percent increase in planned spending over 2017.
    EP Energy said it would boost capital spending to $600-$650
million in 2018, up about 9 percent from the $550-$600 million
it planned to spend in 2017.
    Cowen said the E&Ps it tracks planned to spend about $66.1
billion on drilling and completions in the lower 48 U.S. states
in 2017, about 53 percent over what they planned to spend in
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, last week forecast the total oil
and natural gas rig count would average 1,004 in 2018 and 1,128
in 2019.
    There were 947 oil and natural gas rigs active on Jan. 26.
On average, there were 876 rigs available for service in 2017,
509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy and
Susan Thomas)
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