December 9, 2016 / 6:30 PM / 2 years ago

UPDATE 1-U.S. drillers add the most oil rigs since July 2015 - Baker Hughes

(Adds Permian rig additions)
    Dec 9 (Reuters) - U.S. energy companies this week added the
most oil rigs since July 2015, extending the seven-month
drilling recovery as crude prices rose to a near 17-month high.
    Drillers added 21 oil rigs in the week to Dec. 9, bringing
the total count up to 498, the most since January, but still
below the 524 rigs seen a year ago, energy services firm Baker
Hughes Inc said on Friday. RIG-OL-USA-BHI
    Since crude prices briefly recovered from 13-year lows to
around $50 a barrel in May, drillers have added a total of 182
oil rigs in 25 of the past 28 weeks, its biggest recovery since
a global oil glut crushed the market over two years.
    While the rig additions this week were scattered across the
country, most (11 rigs) were in the Permian basin in West Texas
and eastern New Mexico.
    Almost two-thirds of the rigs added since May, or 109, were
in the Permian, bringing the total in the nation's biggest oil
shale formation up to 246, the most since September 2015.
    The Baker Hughes oil rig count plunged from a record 1,609
in October 2014 to a six-year low of 316 in May as U.S. crude
collapsed from over $107 a barrel in June 2014 to near $26 in
February 2016.
    U.S. crude futures were trading around $51 a barrel
on Friday on optimism that non-OPEC producers meeting in Vienna
over the weekend would agree to cut output to bolster the
cartel's own agreement to limit production. 
    The Organization of the Petroleum Exporting Countries last
week agreed to slash production by 1.2 million barrels per day
in the first half of 2017. 
    With prices expected to keep rising in coming months,
analysts said they expect U.S. energy firms to boost spending on
drilling and pump more oil and natural gas from shale fields in
coming years.
    Futures for calendar 2017 were trading around $54
a barrel, while calendar 2018 was fetching near $55.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, forecast the total oil and gas
rig count would average 506 in 2016, 699 in 2017 and 910 in
2018. Most wells produce both oil and gas.
    That compares with an average of 978 oil and gas rigs active
in 2015 and an average of 500 so far in 2016, according to Baker
Hughes data.
    Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed 20
exploration and production (E&P) companies, including PDC Energy
Inc, planned to increase spending by an average of 34
percent in 2017 over 2016.
    That projected 2017 spending increase followed an estimated
48 percent decline in 2016 and a 35 percent decline in 2015,
Cowen said according to the 64 E&P companies it tracks.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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