U.S. energy firms added oil and natural gas rigs for a 15th month in row in October as oil prices soared to fresh seven-year highs, prompting some drillers to return to the wellpad.
For the week, the oil and gas rig count, an early indicator of future output, rose two to 544 in the week to Oct. 29, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
That was the seventh time the rig count increased in the past eight weeks.
The total rig count was still up 248, or 84%, over this time last year.
For the month, the number of active oil and gas rigs rose by 23, putting the total count up for a 15th month in a row for the first time since August 2010 when it rose for a record 15 months.
U.S. oil rigs rose one to 444 this week, while gas rigs also gained one to 100, their highest since mid-September.
For the month, the number of active oil rigs rose by 23, putting the total count up for a 14th month in a row for the first time since July 2017.
The gas rig count, meanwhile, rose by one during October, putting it up for a second month in a row.
U.S. crude futures rose to their highest since 2014 earlier this week and were currently trading around $83 a barrel on Friday.
With oil prices up about 71% so far this year, some energy firms planned to raise spending in 2021 after cutting drilling and completion expenditures in 2019 and 2020. Most, however, are returning growing free cash flow to shareholders rather than adding output.
Oddly, an even bigger price increase in natural gas – futures were up 115% so far this year – has not yet encouraged drillers to seek more gas. The oil rig count was up about 66% since the start of the year, while the number of active gas rigs was only up about 20%.
Even though producers were not drilling many new gas wells, the U.S. Energy Information Administration (EIA) projected gas output from the biggest shale basins would rise to a record high for a sixth month in a row in November.
That is in part because companies were completing oil and gas wells drilled long ago, prompting some analysts to project that drilling will have to increase soon or production will decline as the number of drilled but uncompleted (DUCs) falls.
“With DUC inventories reaching critical levels, continual rig additions are needed to further sustain dry gas production from 2023-onward,” analysts at Raymond James said this week in a report.
The EIA said producers completed 876 oil and gas wells in the biggest shale basins in September, the most since March 2020, leaving just 5,385 DUCs, the lowest since February 2017.
That was the 15th month in a row that the number of DUCs declined, the longest streak on record, according to EIA data going back to 2014.