More rigs added during the month
U.S. energy firms continued to slowly add oil and gas rigs during the month of June as crude prices rose to their highest since 2018, prompting some operators to return to the field.
The oil and gas rig count rose to its highest level since April 2020. According to Baker Hughes, the total rig count was up about 77%, over this time last year. It was also up 93% since falling to a record low in August 2020.
Along the Gulf Coast, the Eagle Ford shale play lost 10 rigs between Texas’ RRC Dist. 1 and 2, with the most lost in Dist. 2 (seven rigs). In the Rocky Mountain region, Colorado hit double digits (10 total), North Dakota added one (17 total) and Wyoming added three (10 total). In the Permian Basin, RRC Dist. 7C lost four rigs, and Dist. 8 added five. U.S. crude futures were trading below $72/bbl on June 18, close to its highest since October 2018.
With prices mostly rising since October 2020, most energy firms are still focusing on capital discipline and investor returns, rather than expanding supply. Some analysts do not expect that extra spending will boost output at all and think it will only replace natural declines in well production.
U.S. crude production last week rose to 11.2 million bbl/d, its highest since May 2020, according to data from the U.S. Energy Information Administration (EIA) on June 16. U.S. shale oil output usually responds rapidly to price signals and the EIA this week forecast production from seven major shale formations would rise 38,000 bbl/d in July to about 7.8 MMbbl/d.
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