April 20, 2018 / 5:10 PM / 6 months ago

U.S. drillers add oil rigs for third consecutive week -Baker Hughes

    By Scott DiSavino
    April 20 (Reuters) - U.S. energy companies added oil rigs
for a third week in a row as energy firms follow through on
plans to spend more on drilling this year with crude prices near
three-year highs.
    Drillers added five oil rigs in the week to April 20,
bringing the total count to 820, the highest level since March
2015, General Electric Co's        Baker Hughes energy services
firm said in its closely followed report on Friday.
RIG-OL-USA-BHI
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when 688 rigs were active. Energy
companies have been steadily increasing spending since mid-2016
when crude prices began recovering from a two-year crash.
    U.S. crude futures        traded over $69 a barrel earlier
this week, their highest since November 2014, but pulled back to
around $68 on Friday. That is up sharply from the $50.85 average
hit in 2017 and $43.47 in 2016.
    Looking ahead, futures were trading around $67 for the
balance of 2018           and $61 for calendar 2019          .
    In anticipation of higher prices, U.S. financial services
firm Cowen & Co said 58 of the roughly 65 exploration and
production (E&P) companies they track have already provided
guidance indicating an 11 percent increase this year in planned
capital spending.
    Cowen said those E&Ps that have reported capital plans for
2018 expected to spend a total of $80.5 billion in 2018, up from
an estimated $72.4 billion in 2017.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week forecast the total oil
and natural gas rig count would average 1,014 in 2018 and 1,129
in 2019. That compares with last week's forecast of 1,013 in
2018 and 1,129 in 2019.
    So far this year, the total number of oil and natural gas
rigs active in the United States has averaged 974, up sharply
from an average of 876 rigs in 2017 and 509 in 2016, and not far
from the total of 978 in 2015. Most rigs produce both oil and
gas.
    U.S. shale oil production is expected to increase in May for
the fourth consecutive month, U.S. Energy Information
Administration data showed this week, boosted by record
production in the prolific Permian Basin of West Texas and New
Mexico.             
    Total oil output is set to rise 125,000 barrels per day
(bpd) to 7 million bpd, with production in the Permian Basin
expected to jump 73,000 bpd to 3.2 million bpd, the largest
according to records dating back to 2007.

    
 (Reporting by Scott DiSavino
Editing by Marguerita Choy)
  
 
 
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