U.S. energy firms last week added oil and natural gas rigs for an eighth week in a row as high prices and prodding by the federal government prompted drillers to return to the wellpad.
The oil and gas rig count, an early indicator of future output, rose nine to 714 in the week to May 13, 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 261, or 58%, over this time last year.
U.S. oil rigs rose six to 563 this week, their highest level since March 2020, while gas rigs gained three to 149, their highest since September 2019.
Even though the combined 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 as many companies focus more on returning money to investors and paying down debt rather than boosting output.
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.
U.S. crude production has been slow to return to 2019’s record rates of 12.3 million barrels per day (bpd) before the pandemic. The government forecasts it will rise from 11.2 million bpd in 2021 to 11.9 million bpd in 2022 and 12.9 million bpd in 2023.
But with oil prices up about 47% so far this year after soaring 55% in 2021, a growing number of energy firms said they plan to boost 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 30% 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.