BISMARCK-North Dakota oil production held steady in January despite harsh winter weather, producing an average of more than 1.17 million barrels per day.

The drop of about 7,000 barrels a day since December was significantly less than regulators expected in January, a month that had extreme winds, subzero temperatures and power outages in the Bakken.

"We really expected a much bigger production drop than we saw," Director of Mineral Resources Lynn Helms said Tuesday as his agency released the preliminary numbers.

That sets North Dakota up to potentially break the oil production record of 1.2 million barrels a day in May or June, Helms said.

"I still think by mid-year, we'll be producing more oil than we've ever produced in North Dakota," Helms said.

Regulators have seen an uptick in applications for drilling permits, indicating that the oil industry is planning to increase activity this spring and summer. The state has 59 drilling rigs operating. Helms said that's about a 74 percent reduction in rig count from the peak of North Dakota drilling activity, but he added that today's drilling rigs are at least twice as efficient.

Some companies are voluntarily restricting oil production in order to meet gas capture targets, but the amount of oil being restricted is unclear, he said.

The state produced more than 2 billion cubic feet per day of natural gas in January, less than a 1 percent decrease since December.

Companies flared 310 million cubic feet per day of natural gas in January, or about 15 percent of gas produced statewide. The figures show an increase in flaring since December but fall within the gas capture targets set by the North Dakota Industrial Commission.

A majority of the gas that was flared came from wells that are connected to pipelines but the pipelines have insufficient capacity, said Justin Kringstad, director of the North Dakota Pipeline Authority.

North Dakota saw an increase in rail transportation of crude oil in January, up 5 percent to 14 percent. Kringstad attributed the increase to a shift in market pricing. Seventy-four percent of crude oil was transported by pipeline in January, he said.