Texas oil and gas producers received 1,166 drilling permits last month, a 21% increase over year-ago levels, the state energy regulator said Feb. 9, after filings surged on the back of higher crude prices.

Nearly half of January's permits were issued for the Midland area of West Texas, home to the Permian Basin oil field. Shale producers have flocked to the Permian because of its prolific resources and relatively cheap production cost.

Benchmark U.S. West Texas Intermediate crude traded above $60 a barrel last month, a level that encouraged increased drilling. There were 478 rigs operating in Texas as of Feb. 9, vs. 361 a year ago, according to data from Baker Hughes Inc. (NYSE: BHGE), a GE company.

Well completions rose by 79% from a year ago to 963, the Railroad Commission of Texas said. The spike in completions, the final step before production can begin, comes as producers are working through a growing backlog of drilled-but-uncompleted wells, known as DUCs.

Although the rate of well completions in Texas is on the rise, the number of DUCs in the state also continued to climb, an indication that producers are still drilling wells faster than they can be completed.

As of December, there were some 2,777 DUCs in the Permian Basin, up 137 from the prior month and a 119% increase from a year ago. In total, there were 7,493 DUCs in the United States, up 37% in a year, according to data from the U.S. Energy Information Administration.

Researchers at investment bank Tudor, Pickering, Holt & Co. estimate that producers will require an additional four to five million of hydraulic horsepower to meet demand for fracking services this year.

Fracking service companies such as Keane Group Inc. (NYSE: FRAC) and Liberty Oilfield Services Inc. (NYSE: LBRT) are expanding hydraulic fracturing fleets, but the market will remain tight this year, likely encouraging higher prices, the firm wrote in a note on Feb. 7.

"Frac spread orders are indeed heating up but they do not close the demand/supply gap in our view," researchers wrote in the note.