U.S. oil companies hiked capital spending the most in half a decade after OPEC’s oil deal late last year, the Energy Department said Monday.
These producers raised oil field investments and other outlays by a combined $4.9 billion in the fourth quarter, an increase of 72 percent compared to the same period the year before, according to the agency’s review of 44 companies.
The increased spending by oil producers marked a turning point for an industry that had cut investments sharply for two years after the collapse of oil prices in the summer of 2014. The financial drought had prompted companies that make oil field equipment and provide drilling services to cut thousands of jobs across Texas.
And the pullback in drilling reduced domestic oil production. By the time oil companies began increasing spending late last year, the operational cash coming in from oil fields had fallen by $475 million for the 44 oil companies, in part because they were putting out less oil. The agency did not name the 44 firms.
The Energy Department also said oil company hedging, a trading technique used to lock in prices for future production, for these companies nearly reached the highest point in a decade in February after oil prices climbed above $50 a barrel. It’s a technique oil companies use to protect their revenue stream if crude prices tumble.