U.S. energy firms this week added oil and natural gas rigs for a fifth week in a row for the first time since November as crude prices extended their rally to a seventh week to levels not seen since 2014, prompting drillers to seek more oil.
The oil and gas rig count, an early indicator of future output, rose three to 613 in the week to Feb. 4, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Even though the rig count has climbed for a record 18 months in a row, the weekly increases have mostly been in single digits and oil production is still far from pre-pandemic record levels as many companies focus more on returning money to investors rather than boosting output.
Baker Hughes said that puts the total rig count up 221, or 56%, over this time last year.
U.S. oil rigs rose two to 497 this week, their highest since April 2020, while gas rigs gained one to 116, their highest since January 2020.
U.S. crude futures traded over $93 per barrel on Friday, their highest since September 2014, putting the contract on track to rise for a seventh week in a row for the first time since October 2021.
ConocoPhillips Chief Executive Ryan Lance on Thursday warned that high prices may lead U.S. oil producers to add production too quickly, leading to oversupply.
“If we are getting back to the level of growth in the U.S.” comparable to the 2014-2015 shale boom, said Lance, and “you’re not worried about it, you should be,” he told investors during a conference call.
ConocoPhillips’ 10-year plan eyes high single-digit volume growth from its shale business in the Permian, while rival Exxon Mobil Corp aims to raise its output from the largest U.S. shale basin by 25% this year on top of a similar increase in 2021.
Data provider Enverus, which publishes its own rig count data, said drillers added 14 rigs in the last week, bringing the total to 720 as of Feb. 2.
Enverus said the biggest increase was in the Permian (plus 11 rigs to 278) where Pioneer Natural Resources Co is the most active driller with 26 rigs, and the Gulf Coast (plus nine rigs to 90) where ConocoPhillips is the most active operator with five rigs.