U.S. energy firms last week added oil and natural gas rigs for a seventh week in a row amid high prices and prodding by the government, although most shale producers were prioritizing shareholder returns over new spending on production.
The oil and gas rig count, an early indicator of future output, rose seven to 705 in the week to May 6, its highest since March 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Baker Hughes said that puts the total rig count up 257, or 57%, over this time last year.
U.S. oil rigs rose five to 557 this week, their highest since April 2020, while gas rigs gained two to 146, their highest since September 2019.
Since Moscow invaded Ukraine on Feb. 24, the U.S. government has urged drillers to produce more oil and gas to reduce domestic prices and help allies break their dependence on Russia energy.
Even though the rig count has climbed for a record 21 months in a row through April, weekly increases have mostly been in single digits and oil production is still far below pre-pandemic record levels.
U.S. crude production, which hit a record 12.3 million barrels per day (bpd) in 2019, was set to rise from 11.2 million bpd in 2021 to 12.0 million bpd in 2022 and 13.0 million bpd in 2023, according to federal energy data.
Top U.S. shale producers this week reported blockbuster first-quarter profits and most poured cash into higher dividends and share buybacks as oil prices churned along at the highest levels in years.
But with oil prices up about 47% so far this year to about $110 a barrel, after soaring 55% in 2021, a growing number of energy firms said they plan to raise capital spending for a second year in a row in 2022.
U.S. financial services firm Cowen & Co said the independent exploration and production (E&P) companies it tracks plan to boost spending by about 29% in 2022 versus 2021 after increasing spending about 4% in 2021 versus 2020.
That follows a drop in capital expenditures of roughly 48% in 2020 and 12% in 2019.
U.S. investment bank Piper Sandler forecast the U.S. total rig count would rise to an average of 684 in 2022 and 783 in 2023. That compares with an average of 478 in 2021, according to Baker Hughes.
The annual average rig count peaked at 1,919 in 2012 and hit a record low of 433 in 2020, according to Baker Hughes data going back to 1988.