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New Drilling To Start As Oil Prices Firm Up

U.S. Rig

In a sign that the U.S. shale industry could spring back to life, one of the top Texas shale companies expects to grow both production and its rig count this year.

Pioneer Natural Resources said in an updated 2016 outlook issued in June that it would increase its horizontal rig count from 12 to 17 rigs in the Permian basin in the second half of the year. Pioneer will add the first rig in September, with plans to follow that up with an additional two rigs in each of October and November. Those rigs will begin drilling and see initial production in early 2017.

By adding those five rigs, Pioneer expects to see a production growth of 13 to 17 percent next year. That will come on top of the 12 percent growth the company expects this year. The updated outlook comes after several weeks of gains in the total U.S. rig count. The U.S. added 21 rigs between the end of May and mid-June, although the industry removed 7 rigs last week, according to Baker Hughes.

Pioneer’s plans, along with the rig data, indicate a slow return of shale drillers to the oil patch. There has been a great deal of speculation whether or not oil rising to $50 would trigger new drilling. The industry won’t come rushing back in a wave, but Pioneer’s decision suggests that at least some companies have an appetite for new drilling at today’s prices.

There is also some anecdotal evidence that companies are starting to finish drilled but uncompleted wells in North Dakota, leading to an uptick in hiring for fracking and well completion services. “We are starting to see a definite increase,” Cindy Sanford, a manager at the Williston office of Job Service North Dakota, told the Forum News Service. “It’s not as crazy as it was before, but we’re starting to see some activity.” After thousands of layoffs, companies are hoping to bring back some of their personnel. “We definitely are starting to see a need for some workers,” Sanford said.

By Charles Kennedy of Oilprice.com

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  • Jesus Rondon on July 04 2016 said:
    definitely to invest again in renting drilling equipment, it is necessary to study the forecast oil prices, in order to assess the rate of return on investment

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