May 11, 2018 / 5:24 PM / 7 months ago

UPDATE 1-U.S. drillers add oil rigs for sixth consecutive week -Baker Hughes

 (Adds rigs in Permian)
    By Scott DiSavino
    May 11 (Reuters) - U.S. energy companies added oil rigs for
a sixth week in a row as crude prices continue to soar to
multi-year highs after new sanctions on Iran are anticipated to
take some supply out of the market, further supporting U.S.
drilling and pushing production to record highs.
    Drillers added 10 oil rigs in the week to May 11, bringing
the total count to 844, the highest level since March 2015,
General Electric Co's        Baker Hughes energy services firm
said in its closely followed report on Friday. RIG-OL-USA-BHI
    That was the first time energy firms added rigs for six
weeks in a row since early March.
    More than half the total oil rigs are in Permian basin in
west Texas and eastern New Mexico, the nation's biggest shale
oil field. Active units there increased by five this week to
463, the most since January 2015.
    The U.S. government expects oil output in the Permian to
rise to a record high near 3.2 million barrels per day in May,
about 30 percent of total U.S. oil production.             
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when 712 rigs were active as energy
companies have been ramping up production in tandem with OPEC's
efforts to cut global output in a bid to take advantage of
rising prices.
    U.S. crude output has surged since 2010, fueled by output
from formations in states including Texas, New Mexico and North
Dakota. Amid the recovery in prices and drilling, production
this year surpassed a previous long-standing output record. 
    The U.S Energy Information Administration on Tuesday
projected average annual U.S. oil output would rise 1.37 million
bpd to a record high 10.72 million bpd in 2018 and 11.86 million
bpd in 2019.        
    Texas energy regulators said in a report this week the state
issued a third more oil and gas drilling permits in April than a
year ago as higher prices continue to spur an increase in
activity.             
    After the United States pulled out of the Iran nuclear deal
earlier in this week, U.S. crude futures        were trading
around $71 a barrel, their highest since November 2014. That is
up sharply from the $50.85 average hit in 2017 and $43.47 in
2016.      
    Looking ahead, futures were trading around $70 for the
balance of 2018           and $65 for calendar 2019          .
    In anticipation of higher prices, U.S. financial services
firm Cowen & Co this week said the exploration and production
(E&P) companies they track have provided guidance indicating a
12 percent increase this year in planned capital spending.
    Cowen said those E&Ps expect to spend a total of $81 billion
in 2018, up from an estimated $72.4 billion in 2017.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week forecast average total
oil and natural gas rig count would rise to 1,020 in 2018 and
1,135 in 2019, up from an earlier projection of 1,015 in 2018
and 1,130 in 2019.
    So far this year, the total number of oil and gas rigs
active in the United States has averaged 983, up sharply from an
average of 876 rigs in 2017 and on track to be the highest since
2014, which averaged 1,862 rigs. Most rigs produce both oil and
gas.

    
 (Reporting by Scott DiSavino
Editing by Marguerita Choy)
  
 
 
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