Rig count is up as Big Oil taps high prices
U.S. rig counts jumped by 22 this week — the biggest increase in four years — as oil companies clamor to tap soaring prices.
Oil rose nearly 4 percent Friday to settle at $93.10 a barrel, the highest close since September 2014 and the cap to the eighth consecutive week of gains in oil markets.
The number of drilling rigs operating nationally climbed by 22 to 635 this week, according to oil field services company firm Baker Hughes. Energy companies have added 238 rigs over the past year, a 60 percent increase from 397 during the same week in 2021.
Tensions between Ukraine and Russia have driven up oil prices in recent weeks, and they jumped again Friday after national security adviser Jake Sullivan said he believed Russia could invade Ukraine as early as next week. Russia is one the world’s top three oil producers.
Even before tensions between Russia and Ukraine, oil prices were rising. Strong demand as the global economy emerges from the coronavirus pandemic is outstripping production and tightening supplies. U.S. commercial crude stockpiles fell by nearly 5 million barrels last week, leaving inventories 11 percent below average for this time of year, the Energy Department reported.
The jump in rig count confirms that oil companies are following through on plans to increase spending on oil and gas projects, a shift from recent strategies to limit spending on new projects to satisfy investors seeking higher profits. Last year, for example, oil giants such as Exxon Mobil and Chevron remained restrained even as oil prices rebounded above $85 from $48 a barrel, funneling the cash to boost dividends, repurchase shares and pay down debt instead of drilling new wells and boosting production.
Now, coming off a banner year in which companies delivered massive profits, soaring stock prices and healthy shareholder
returns, Big Oil appears ready to get off the sidelines and spend, which could mean new jobs in Houston and Texas. Exxon, which recently reported annual profits of $23 billion in 2021, said it planned to increase production by 25 percent this year.
Chevron, which earned nearly $16 billion in 2021, said it would boost production by 10 percent. Bloomberg contributed to
this report.