What a 22.6% Jump in Rig Activity Means for Nigeria’s Oil Production Targets

By Àkànní Olúwaségún Michael

Nigeria recorded a significant increase in drilling activity in the first quarter of 2026, with the number of active oil rigs rising by 22.6 per cent year-on-year, according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The NUPRC, in its Q1 2026 Upstream Service Industry Newsletter, said active rig count rose to between 72 and 73 rigs during the period, up from the corresponding quarter of 2025.

The development is growing investment and operational activity in the upstream sector as the Federal Government intensifies efforts to raise crude oil production and improve revenue generation.

However, despite the increase in drilling activity, production figures mean that Nigeria remains below the output level required to meet its 2026 budget assumptions.

Data from the NUPRC showed that land-based rigs accounted for the largest share of operations throughout the quarter. Total rig count stood at 72 in January and February before increasing to 73 in March following a rise in offshore rigs from 11 to 12, while swamp rigs remained unchanged at nine.

Source: NUPRC Upstream Service Industry Newsletter, Q1 2026

 The commission also issued 49 Upstream Monitoring and Regulation licences during the quarter, with rig-related approvals accounting for the majority of the permits granted.

While rig activity is widely regarded as a leading indicator of future output, new drilling campaigns often take several months before production begins to reflect in national output figures.

Speaking at an industry forum in 2024, oil executive Austin Avuru, founding managing director of Conoil Producing, estimated that Nigeria would require about 45 rigs drilling more than 400 wells over two years to add 800,000 barrels per day to production capacity.

The NUPRC has attributed the increase in rig activity to reforms introduced under the Petroleum Industry Act, the Project 1 Million Barrels Initiative launched in 2024, and a series of executive orders designed to encourage investment through fiscal incentives.

Nigeria’s 2026 budget is benchmarked on crude oil production of 1.84 million barrels per day, an oil price of $64.85 per barrel, and an exchange rate of N1,400 to the dollar. The assumptions imply an annual crude production of about 671.6 million barrels and projected oil earnings of approximately $43.55 billion.

According to NUPRC production reports, crude and condensate production averaged 1.63 million barrels per day in January, declined to 1.48 million barrels per day in February, and later recovered to 1.66 million barrels per day in April.

A review of production data indicated that between January and May 2026, Nigeria produced about 242.6 million barrels, compared with the 277.8 million barrels implied by the budget benchmark. The difference represents a shortfall of roughly 35.3 million barrels, or 12.7 percent below target.

The figures suggest that while drilling activity is increasing, the impact on production has yet to fully materialise.

The NUPRC newsletter also reported that the Oil and Gas Industry Service Permit scheme generated N1.23 billion in regulatory fees during the first quarter. The revenue came largely from specialised service permits and is separate from proceeds earned from crude oil exports.

Meanwhile, higher international crude prices have provided some support for government revenues. Bonny Light traded above $70 per barrel in February, while Brent crude briefly exceeded $120 per barrel in April amid heightened geopolitical tensions.

The 22.6 per cent increase in rig activity is an encouraging sign for Nigeria’s oil industry and suggests that upstream investment is beginning to recover. It indicates that operators are drilling more wells and positioning for future production growth.

However, the rise in rig count alone does not guarantee that Nigeria will achieve its 2026 production target of 1.84 million barrels per day.

Current output remains below budget assumptions, and the benefits of increased drilling may take time to materialise.