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UPDATE 1-U.S. oil rigs rise to most since November 2015 -Baker Hughes

Published 2017-01-27, 01:31 p/m
© Reuters.  UPDATE 1-U.S. oil rigs rise to most since November 2015 -Baker Hughes
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(New headline, adds Permian rig count)

Jan 27 (Reuters) - U.S. energy companies this week added oil rigs for a 12th week in the last 13, extending an eight-month recovery as drillers take advantage of a deal by OPEC to cut production that has kept crude prices over $50 a barrel since early December.

Drillers added 15 oil rigs in the week to Jan. 27, bringing the total count to 566, the most since November 2015, energy services firm Baker Hughes Inc BHI.N said on Friday. RIG-OL-USA-BHI

During the same week a year ago, there were 498 active oil rigs.

Since crude prices first topped $50 a barrel in May after recovering from 13-year lows in February, drillers have added a total of 250 oil rigs in 31 of the past 35 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid-2014.

Almost two-thirds of the rigs added since May were in the Permian basin, the nation's biggest shale oil formation located in west Texas and eastern New Mexico. Drillers this week added 10 rigs there, bringing the total up to 291, the highest since March 2015.

The Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May. U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.

U.S. crude futures CLc1 were trading around $53 a barrel on Friday and set for a sixth increase in the last seven sessions on signs the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers were mostly adhering to planned output cuts announced in November and December. O/R

Analysts said they expect U.S. energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.

Futures for the balance of 2017 CLBALst were trading around $54 a barrel, while calendar 2018 CLYstc1 was fetching almost $55.

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 783 in 2017, 898 in 2018 and 1,009 in 2019. Most wells produce both oil and gas.

That compares with an average of 683 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 30 exploration and production (E&P) companies planned to increase spending by an average of 35 percent in 2017 over 2016.

That spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said, according to the 65 E&P companies it tracks.

U.S. production was expected to rise from 8.9 million barrels a day in December 2016 to around 9.0 million bpd in April, 9.1 million in October and 9.2 million in November, the U.S. Energy Information Administration said. Graphic on U.S. rig counts

http://graphics.thomsonreuters.com/15/rigcount/index.html U.S./Canada natural gas rig count versus Henry Hub futures price

http://tmsnrt.rs/2eT9k44

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