January 12, 2018 / 6:12 PM / 5 months ago

U.S. drillers add most oil rigs in a week since June -Baker Hughes

    By Scott DiSavino
    Jan 12 (Reuters) - U.S. energy companies added 10 oil rigs
this week, the biggest increase since June, as crude prices rose
to their highest levels in three years, prompting drillers to
return to the well pad. 
    The total rig count rose to 752 in the week to Jan. 12, the
most since September, General Electric Co's        Baker Hughes
energy services firm said in its closely followed report on
Friday. RIG-OL-USA-BHI
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when only 522 rigs were active after
energy companies boosted spending plans in 2017 as crude started
recovering from a two-year price crash.
    The increase in U.S. drilling lasted 14 months before
briefly stalling in the second half of last year as some
producers trimmed their 2017 spending plans after prices turned
softer over the summer.
   "Drilling activity may not be up every week, but we continue
to expect growth through the first quarter of 2018 and longer if
prices hold," James Williams, president of WTRG Economics in
Arkansas, said in a report this week.
    U.S. crude futures        traded around $64 a barrel this
week, near its highest since December 2014. That compares with
averages of $50.85 in 2017 and $43.47 in 2016.
    Looking ahead, futures were trading around $62 for the
balance of 2018           and $58 for calendar 2019          .
    In anticipation of higher prices in 2018 than 2017, U.S.
financial services firm Cowen & Co said 23 of the roughly 65
E&Ps they track have already provided capital expenditure
guidance for 2018 indicating a 12 percent increase in planned
spending over 2017.
    Cowen said the E&Ps it tracks said they would spend about
$66.1 billion on drilling and completions in the lower 48 U.S.
states in 2017, which was about 53 percent over what they
planned to spend in 2016.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week slightly reduced their
forecast for the total oil and natural gas rig count to an
average of 996 in 2018 and 1,126 in 2019. Last week, it forecast
997 in 2018 and 1,126 in 2019.
    There were 939 oil and natural gas rigs active on Jan. 12.
On average, there were 876 rigs available for service in 2017,
509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
   
    Overall, U.S. production is expected to rise to an all-time
high of 10.3 million barrels per day in 2018 and 10.9 million
bpd in 2019, up from 9.3 million bpd in 2017, according to a
federal energy projection this week.        
    U.S. output peaked on an annual basis at 9.6 million bpd in
1970, according to federal energy data.
    Much of the production growth will be concentrated in the
Permian Basin, the largest U.S. oilfield stretching across Texas
and New Mexico, said John Staub, the EIA director of the office
of petroleum, natural gas and biofuels analysis.

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
  
 
 
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