U.S. energy firms this week added oil and natural gas rigs for a third week in a row as oil prices rose to a near seven-year high, prompting some drillers to return to the wellpad.
The oil and gas rig count, an early indicator of future output, rose six to 556 in the week to Nov. 12, its highest level since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
That puts the total rig count up 244 rigs, or 78%, over this time last year.
U.S. oil rigs rose four to 454 this week, their highest since April 2020, while gas rigs rose two to 102, their highest since September 2021.
U.S. crude futures rose close to their highest prices since 2014 earlier this week and were trading around $81 a barrel on Friday.
With oil prices up about 67% so far this year, some energy firms said they plan to boost spending in 2021 and 2022 after cutting drilling and completion expenditures in 2019 and 2020.
That spending increase, however, remains small as most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns rather than adding output.
U.S. oil production is expected to slide from 11.3 million barrels per day (bpd) in 2020 to 11.1 million bpd in 2021 before rising to 11.9 million bpd in 2022, according to government projections. That compares with the all-time annual high of 12.3 million bpd in 2019.
Oddly, an even bigger price increase in natural gas – futures were up 91% so far this year – has not yet encouraged drillers to seek much more gas.
The oil rig count was up about 70% since the start of the year, while the number of active gas rigs was up only about 23%.
U.S. financial services firm Cowen & Co said the independent exploration and production (E&P) companies it tracks plan to increase spending about 4% in 2021 versus 2020, and 11% in 2022 versus 2021 for the dozen or so firms that have already announced estimates for next year.
That follows capital expenditure reductions of roughly 48% in 2020 and 12% in 2019.