November 18, 2016 / 6:57 PM / a year ago

UPDATE 1-U.S. drillers this week add most oil rigs in 16 mths -Baker Hughes

(Adds rigs in Permian, paragraph 4)
    Nov 18 (Reuters) - U.S. oil companies added 19 drilling rigs
this week, the biggest hike since July 2015, as shale producers
cautiously redeployed cash amid OPEC's plans to curb production
and after Donald Trump's presidential election victory.
    Drillers added 19 oil rigs in the week to Nov. 18, boosting
the total to 471, the most since January, but still below 564 a
year ago, energy services firm Baker Hughes Inc said on
Friday. RIG-OL-USA-BHI
    Since May, when U.S. crude prices hit $50 a barrel, drillers
have added rigs in 22 of 25 weeks, with 155 additional oil rigs
over that period.
    Almost two-thirds of the rigs added since May, or 92, were
in the Permian basin in west Texas and eastern New Mexico,
bringing the total there up to 229, the most since October 2015.
    As crude prices collapsed from over $107 a barrel in June
2014 to near $26 in February 2016, the number of oil rigs
plunged from a record high of 1,609 in October 2014 to a
six-year low of 316 in May 2016.
    On Friday, U.S. crude futures were trading above $45,
on track to rise for the first week in four on hopes that the
Organization of the Petroleum Exporting Countries might agree to
limit production at a meeting at the end of the month. 
    In the longer term, Trump is expected to be an advocate for
oil and gas drilling, who will slash regulations and encourage
new energy industry development. 
    With oil prices expected to rise with a projected tightening
of supplies and a leaner, more efficient U.S. shale industry,
producers said they will follow through on plans to boost
spending on new drilling. 
    "You're starting to see a little bit of light at the end of
the tunnel," Ryan Lance, chief executive of ConocoPhillips
, the largest independent U.S. oil producer, told Reuters
last week. "We're beginning to put capital back to work, but
we're being cautious."
    Futures were trading near $49 a barrel for calendar 2017
 and near $51 for calendar 2018.
    "Natural gas and oil drilling activity should end the year
within a few rigs of 600," James Williams, president of energy
consultant WTRG Economics in Arkansas, said this week in a note.
    The combined oil and gas rig count was 588 in the week ended
Nov. 18, according to Baker Hughes data. Most wells produce both
oil and gas.
    Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed 18
exploration and production (E&P) companies, including Occidental
Petroleum Corp and ConocoPhillips, planned to increase
spending by an average of 39 percent in 2017 over 2016.
    Cowen said that forecast 2017 increase followed an estimated
48 percent decline in 2016 and a 35 percent decline in 2015 for
the 65 E&P companies it tracks.
    That increased spending should boost the total number of oil
and gas rigs to a forecast average of 634 in 2017 and 732 in
2018 from a projected 514 in 2016, Cowen said.
    That compares with an average of 978 oil and gas rigs active
in 2015, according to Baker Hughes data.

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy and
David Gregorio)

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