U.S. operators extend revival as oil trades near 17-month high

By Meenal Vamburkar on 12/23/2016

HOUSTON (Bloomberg) -- Oil explorers added rigs for the eighth straight week, extending a ramp-up of activity in the U.S. shale patch as prices hover near $53/bbl.

Rigs targeting crude in the U.S. rose by 13 to 523 this week, Baker Hughes said Friday. Drillers have added 207 rigs since the count hit a seven-year low on May 27.

Most of the recovery in drilling has been in the prolific Permian basin, which has been a hotbed for acquisitions this year. Rig gains will continue to be primarily in that region until oil prices are "substantially higher," said Robert Christensen, an analyst at Drexel Hamilton LLC in New York. But don’t expect a surge.

"It’s the only place you really can make any money," he said. "It’s going to be a very rational progression."

West Texas Intermediate crude touched $54.51 on Dec. 12 and has hovered near $53 after the Organization of Petroleum Exporting Countries and other major exporters agreed to cut supplies to ease a global glut. The deal may make room for more U.S. shale growth, IHS Markit’s Daniel Yergin said earlier this month.

Drillers added four oil rigs in the Permian, raising the count to 262.

The U.S. could add 300,000 to 500,000 bpd by the end of 2017 with oil prices around $50 to $55, according to Yergin. But mega-projects will be much slower to come back.

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