U.S. rig count up 3% in the last month, many operators planning to drill for more gas

The U.S. rig count rose by six during the past week and the count is up 3% in the last month and up 70% year-over-year, according to Enverus Rig Analytics.

Over the last month, 21 rigs have been added in the U.S., with 19 of those drilling in the Permian Basin.

Henry Hub natural gas prices rose during the second half of the year. Front-month settlement prices went from as low as around $2.50/MMBtu in April to around $6.30/MMBtu in early October. However, revelations of a spreading Omicron variant of COVID-19 and a warm short-term outlook have pushed prices to a settlement of $4.26/MMBtu on Dec. 1.

In preparation for peak demand during winter heating season amid a positive price environment, Ark-La-Tex rig activity, including Haynesville, has seen an increase compared to the end of the first half of this year. Seven of those additions occurred in the Louisiana portion of the Haynesville play. The most active operators are Aethon Energy, Southwestern Energy and Chesapeake Energy.

Appalachian Basin rig activity has also increased in the second half of the year (approximately 17% increase). The additions occurred in Ohio and West Virginia, while Pennsylvania, where the Marcellus core lies, stayed flat. The most active operators are Tug Hill Operating, Ascent Resources and EQT Corp., all of whom operate in those states. Recent activity included a number of interesting reactivations, with Repsol adding a rig in August after being inactive since early November 2019. The Madrid-based company is currently running two rigs in West Virginia.

WTI crude futures in the U.S. were trading around $67/bbl on December 3, putting the contract on track to decline for a sixth week in a row for the first time since November 2018.

Chesapeake Energy Corp., once the second-largest U.S. natural gas producer, this week continued to double down on its return of capital commitment, becoming the latest shale producer to focus on shareholder management.

The top two U.S. oil producers are among the other companies that have resumed share repurchases after halting them last year, while releasing positive spending plans this week.

Exxon Mobil Corp. extended its previously projected investment rate for two years, with the Permian Basin, the top U.S. oil field, one of its top oil project priorities, while Chevron Corp. plans to boost spending on new oil and gas projects in 2022 by 20%.

U.S. financial services firm Cowen & Co. said the independent E&P companies it tracks plan to increase spending about 4% in 2021 versus 2020, and 12% in 2022 versus 2021 for the dozen or so firms that have already announced estimates for next year.

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