December 23, 2016 / 6:34 PM / 2 years ago

UPDATE 1-U.S. drillers add oil rigs for 8th week in a row -Baker Hughes

(Adds rate of rig increase, comparisons to year ago)
    Dec 23 (Reuters) - U.S. energy companies added oil rigs for
an eighth week in a row, extending a seven-month drilling
recovery as crude prices remained near a 17-month high.
    Drillers added 13 oil rigs in the week to Dec. 23, bringing
the total count up to 523, the most since December 2015, but
still below the 538 rigs seen a year ago, energy services firm
Baker Hughes Inc said on Friday. RIG-OL-USA-BHI
    That was the third straight week of double-digit rig
increases, a sign the industry has accelerated spending on new
production now that crude prices have mostly held over $50 a
barrel for a fourth week.
    Since crude prices recovered from 13-year lows in February
to around $50 a barrel in May, drillers have added a total of
207 oil rigs in 27 of the past 30 weeks, the biggest recovery in
rigs since a global oil glut crushed the market over two years.
    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 holding around $53 a barrel
on Friday ahead of the Christmas and New Year holidays as the
market waited to see how the Organization of the Petroleum
Exporting Countries manages its planned output cuts starting on
Jan. 1. 
    That put the front-month on track for its fifth week of
gains in the last six, with the contract up about 22 percent
since mid-November.
    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 now that energy prices are
projected to keep climbing.
    Futures for both calendar 2017 and 2018 
 were trading around $55 a barrel.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, recently forecast the total oil
and natural gas rig count would average 508 in 2016, 723 in 2017
and 933 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 506 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 23
exploration and production (E&P) companies planned to increase
spending by an average of 35 percent in 2017 over 2016.
    That spending increase in 2017 followed an estimated 47
percent decline in 2016 and a 35 percent decline in 2015, Cowen
said, according to the 65 E&P companies it tracks.

 (Reporting by Scott DiSavino; Editing by Meredith Mazzilli)
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