U.S. drillers this week added oil rigs for a sixth consecutive week, according to the Baker Hughes Inc. (NYSE: BHI) rig count report released Aug. 5, despite crude prices falling to April lows below $40 a barrel this week.
Some producers are still boosting spending on expectations for higher prices in the future.
Drillers added seven oil rigs in the week to Aug. 5, bringing the total rig count up to 381, compared with 670 a year ago, the energy services firm said.
They have added a total of 51 rigs since the week to July 1, the longest streak of weekly additions since July-August 2015, when 37 rigs were added over six weeks.
The total U.S. rig count increased by one this week to 464, while the Canadian rig count grew by three to 122. In all, the number of rigs pumping in North America ended the week at 586, up four from last week.
In the U.S., energy firms continued to add most rigs in the Permian shale in west Texas and eastern New Mexico. They activated five rigs there this week, bringing the total to 177, the most since February and 34% over recent lows in April.
After rising by 44 oil rigs in July, the most in a month since April 2014, analysts forecast the U.S. oil rig count would be choppy over the next few months due to seasonal drilling declines and a near 20% drop in crude prices on oversupply concerns since topping $50 a barrel in early June.
“We expect weekly changes in the rig count will be choppy in coming months and could stall or even decline as seasonal drilling activity declines,” analysts at U.S. financial services firm Cowen & Co. said in a note this week.
The number of rigs in the Gulf of Mexico was down by two, ending the week at 17, the report showed.
U.S. crude futures were down about 1% on Aug. 5 at above $41 a barrel after the dollar surged on robust U.S. jobs data.
Earlier in the week, U.S. crude dropped below $40, pushing it further away from the $50 level hit in June that analysts and producers said would prompt their return to the well pad.
Recent price declines over the past several weeks, however, have not stopped companies from planning to add more rigs over the next several months in to next year.
Cowen noted several companies, including Apache Corp., Chesapeake Energy Corp., Cimarex Energy Co. and Marathon Oil Corp., announced plans in the past week to add rigs.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, forecast total oil and natural rig count would average 491 in 2016, 683 in 2017 and 961 in 2018.
The total oil and gas rig count bottomed at 404 in mid-May, the lowest level since at least 1940, and increased by one to 464 in the week ended Aug. 5, according to the Baker Hughes data. In 2015, the total rig count averaged 978.
Recommended Reading
Devon Energy Leads $244MM Funding Round for Fervo Energy
2024-02-29 - The funds will finance Fervo Energy’s next phase of growth as it puts to use oil and gas technology and techniques to scale geothermal energy.
US Geothermal Sector Gears Up for Commercial Liftoff
2024-04-17 - Experts from the U.S. Department of Energy discuss geothermal energy’s potential following the release of the liftoff report.
Energy Transition in Motion (Week of March 1, 2024)
2024-03-01 - Here is a look at some of this week’s renewable energy news, including Chevron’s plans for a solar-to-hydrogen facility in California.
Sinopec Completes Drilling of China’s Deepest Geothermal Well
2024-04-11 - Sinopec said the Fushen-1 Well was drilled to a depth of 5,200 meters.
Google Exec: More Collaboration Needed for Clean Power
2024-04-17 - Tech giant Google has partnered with its peers and several renewable energy companies, including startups, to ramp up the presence of renewables on the grid.