In its weekly release, Houston-based oilfield services company
Baker Hughes Inc.
) reported a dip in the U.S. rig count (number of rigs searching
for oil and gas in the country). This fall can be attributed to a
decrease in the tally of gas-directed rigs, partially offset by
increase in oil rig count.
The Baker Hughes' data, issued since 1944, acts as an important
yardstick for drilling contractors like
Diamond Offshore Drilling Inc.
), etc. in gauging the overall business environment of the oil
and gas industry.
Analysis of the Data
Rigs engaged in exploration and production in the U.S. totaled
1,738 for the week ended Apr 5, 2013. This was down by 10 from
the previous week's rig count and indicates the second decrease
in 3 weeks.
Despite this, the current nationwide rig count is almost double
the lowest level reached in recent years (876 in the week ended
Jun 12, 2009), though it is way below the prior-year level of
1,979. It rose to a 22-year high in 2008, peaking at 2,031 in the
weeks ending Aug 29 and Sep 12.
Rigs engaged in land operations descended by 15 to 1,665,
offshore drilling was up by 3 to 48 rigs, while inland waters
activity increased by 2 to 25 units.
Natural Gas Rig Count:
Natural gas rig count decreased for the third time in as many
weeks to 375 (a drop of 14 rigs from the previous week). As per
the most recent report, the number of gas-directed rigs is at
their lowest level since May 14, 1999 and is down 54% from its
2012 peak of 811.
The current natural gas rig count remains 77% below its all-time
high of 1,606 reached in late summer 2008. In the year-ago
period, there were 647 active natural gas rigs.
Oil Rig Count:
The oil rig count - which was at a 25-year high of 1,432 in
August last year - increased by 3 to 1,357. The current tally is
well above the previous year's rig count of 1,329. It has
recovered strongly from a low of 179 in June 2009, rising 7.6
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 6 was up by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs rose by 8 to 451, while the
horizontal/directional rig count (encompassing new drilling
technology that has the ability to drill and extract gas from
dense rock formations, also known as shale formations) was down
by 18 to 1,287. In particular, horizontal rig units - that
reached an all-time high of 1,193 in May 2012 - slumped by 15
from the last week's level to 1,084.
As of now, Transocean, Diamond Offshore and Ensco are all Zacks
Rank #3 (Hold) stocks, implying that these are expected to
perform in line with the broader U.S. equity market over the next
one to three months.
BAKER-HUGHES (BHI): Free Stock Analysis
DIAMOND OFFSHOR (DO): Free Stock Analysis
ENSCO PLC (ESV): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis
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