According to Baker Hughes, which provides services to the energy sector, the US rig count rose for the third week in a row to reach 689, the highest number since early 2020.
The gas and oil rig count can be used as an early predictor of future production, so the rise would seem to suggest that some oil and gas producers are heeding the US Government’s call for greater domestic production to help replace oil and gas from Russia, which has been sanctioned by many countries since its invasion of Ukraine.
Oil production was already set to climb to 12 million barrels per day (bpd) this year, with some companies like Chevron and ExxonMobil, the companies behind the Texaco and Mobil lubricant brands, already having announced their intentions to increase their US shale oil production. This will then likely surpass the pre-pandemic 2019 value of 12.3 million bpd to reach 13 million bpd next year.
A note from analysts at the bank Mizuho pointed to a need for the industry to drill new wells, however:
“Drilled (but) uncompleted inventory is at historically low levels. We expect drilling activity to continue to increase slowly in the Permian, while high prices incentivize continued drawdown of already low (DUC) inventory.”
Many companies have recently preferred to focus on paying off debt and generating investor returns rather than growing production, but high oil prices have spurred many oil companies into increasing drilling and completion spending for a second consecutive year following reductions in 2019 and 2020.