April 7, 2017 / 5:30 PM / a year ago

UPDATE 1-U.S. drillers add oil rigs for 12th straight week-Baker Hughes

 (Adds rigs added in Permian basin in paragraph 4)
    April 7 (Reuters) - U.S. drillers added oil rigs for a 12th
week in a row, extending the recovery into an 11th month as
energy companies boost spending on new production to take
advantage of a recovery in crude prices.
    Drillers added 10 oil rigs in the week to April 7, bringing
the total count up to 672, the most since August 2015, energy
services firm Baker Hughes Inc         said on Friday.
    During the same week a year ago, there were 354 active oil
    More than half of the rigs added since the recovery started
in June after crude prices first topped $50 a barrel, were in
the Permian basin, the nation's biggest shale oil formation
located in west Texas and eastern New Mexico. Drillers this week
added 12 rigs there, bringing the total up to 331, the highest
since February 2015.
    Chevron Corp         Chief Executive John Watson said this
week the company was set to boost development of its vast
Permian basin holdings.             
    U.S. crude futures        traded at a one-month high just
below $53 a barrel on Friday after the United States fired
missiles at a Syrian government airbase, putting the contract on
track to rise for a second week in a row.      
    Analysts projected U.S. energy firms would boost spending on
drilling and pump more oil and natural gas from shale fields in
coming years with energy prices expected to climb.
    Futures for the balance of 2017           and calendar 2018
          were both fetching around $53 a barrel.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week forecast the total oil
and gas rig count would average 851 in 2017, 978 in 2018 and
1,089 in 2019. Most wells produce both oil and gas.
    That compares with an average of 749 so far in 2017, 509 in
2016 and 978 in 2015, 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 57
exploration and production (E&P) companies planned to increase
spending by an average of 50 percent in 2017 over 2016.
    That expected spending increase in 2017 followed an
estimated 48 percent decline in 2016 and a 34 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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