U.S. energy firms added oil and natural gas rigs for a second week in a row as higher oil prices prompted some drillers to return to the wellpad.
The oil and gas rig count, an early indicator of future output, rose eight to 448 in the week to May 7, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
That put the total rig count 74 rigs, or 20%, higher than this time last year. It was also up 84% since falling to a record low of 244 in August 2020, according to Baker Hughes data going back to 1940.
U.S. oil rigs rose two to 344 this week, while gas rigs rose the seven, the most in a week since December 2018, the highest since March 2020, to 103. U.S. crude futures were trading around $65 a barrel on Friday, putting the contract up about 34% so far this year after they dropped about 21% last year.
Completions and drilling activity have good momentum after some energy firms raised spending plans for 2021 after cutting over the past two years.
But as the increases have been small with most firms focusing on shareholder returns over volume growth, drilling captivity has been growing moderately.
“Listed companies prefer to preserve cash to improve shareholders returns instead of raising capex as was historically the case with WTI above $60,” commodity intelligence company Kpler said.
U.S. financial services firm Cowen & Co said the independent exploration and production (E&P) companies it tracks plan to increase spending about 1% in 2021 versus 2020. That follows capex reductions of roughly 49% in 2020 and 12% in 2019.
“Our outlook remains positive… It is likely that rig count will be near 600 before the end of the year,” said James Williams at WTRG Economics in Arkansas.
Enverus, a provider of energy data with its own rig count, said the number of active rigs in the week to May 5 held steady at 524.
Enverus said the most active operator continues to be Pioneer Natural Resources Co at 30 rigs (up by 21 year-over-year), which includes nine that were just added through the acquisition of DoublePoint Energy on May 4.