(Reuters) – U.S. energy companies added oil rigs for a fifth week in a row as they follow through on plans to spend more on drilling this year with higher crude prices boosting their profits and pushing nationwide production to record highs.
Drillers added nine oil rigs in the week to May 4, bringing the total count to 834, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
More than half the total oil rigs are in the Permian basin in west Texas and eastern New Mexico. Active units there increased by six this week to 458, the most since January 2015.
The U.S. government expects oil output in the Permian to rise to a record high near 3.2 million barrels per day in May, about 30 percent of total U.S. oil production.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 703 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output, in a bid to take advantage of rising prices.
U.S. crude futures traded near $70 a barrel this week, their highest since November 2014. That is up sharply from the $50.85 average hit in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $69 for the balance of 2018 and $63 for calendar 2019.
U.S. financial services firm Cowen & Co last week 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, last week forecast average total oil and natural gas rig count would reach 1,015 in 2018 and 1,130 in 2019.
So far this year, the total number of oil and gas rigs active in the United States has averaged 980, up sharply from an average of 876 rigs in 2017 and on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.
Shale oil producer Pioneer Natural Resources Co said it is considering adding more Permian drilling rigs later in 2018 and is likely to increase next year’s capital budget, which was previously forecast at $2.9 billion.
Continental Resources Inc, one of the most-prolific U.S. shale companies, posted a better-than-expected quarterly profit on Wednesday, thanks to rising oil prices and spiking output in its core North Dakota Bakken shale operations.
For the second consecutive quarter, Continental bested rival Whiting Petroleum Corp to be the largest oil producer in the Bakken, even as Whiting’s output rose over 8 percent in the first quarter.
Apache Corp raised its full-year U.S. output forecast to 250,000-258,000 barrels of oil equivalent per day from a previous range of 245,000-255,000 boepd, driven mostly by more operating wells in the first quarter.
The U.S Energy Information Administration on Monday said U.S. oil production jumped to a record high 10.3 million barrels per day (bpd) in February.