(Reuters) – U.S. energy companies added oil rigs for a fourth week in a row even though crude pulled back from three-year highs over the past couple of weeks as more drillers boost their 2018 spending plans.
Drillers added seven oil rigs in the week to Feb. 16, bringing the total count up to 798, the highest level since April 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
That was the first time since June that drillers added rigs for four consecutive weeks.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 597 rigs were active as energy companies have continued to boost spending since mid-2016 when crude prices began recovering from a two-year crash.
U.S. crude futures traded around $62 a barrel this week, down from late January when prices rose to their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $60 for the balance of 2018 and $55 for calendar 2019.
In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 41 of the roughly 65 exploration and production (E&P) companies they track, including Occidental Petroleum Corp, have already provided capital expenditure guidance indicating a 10 percent increase in planned spending over 2017.
Occidental said this week it plans to spend $3.9 billion in 2018, about 7 percent higher from 2017 levels. Production should rise this year 8 percent to 12 percent, much of that in the Permian Basin of West Texas and New Mexico, the largest U.S. oilfield.
Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent over what they planned to spend in 2016.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week slightly increased their forecast for the total oil and natural gas rig count to an average of 1,014 in 2018 and 1,128 in 2019. Last week, they forecast 1,002 in 2018 and 1,128 in 2019.
There were 975 oil and natural gas rigs active on Feb. 16. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
The U.S. Energy Information Administration this week projected U.S. production in the biggest shale basins would rise to a record high of 6.8 million barrels per day in March, representing about two-thirds of total U.S. oil output.
The EIA expects total U.S. production will rise to 10.6 million bpd in 2018 and 11.2 million bpd in 2019, up from 9.3 million bpd in 2017. [EIA/M]
The current all-time U.S. output annual peak was in 1970 at 9.6 million bpd, according to federal energy data.
Reporting by Scott DiSavino
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