In its weekly release, Houston-based oilfield services company
Baker Hughes Inc.
) reported a marginal fall in the U.S. rig count (number of rigs
searching for oil and gas in the country). This can be due to a
decrease in the tally of oil-directed rigs.
The Baker Hughes data, issued since 1944, acts as an important
yardstick for energy service providers 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
1,871 for the week ended Jul 18, 2014. This was down by 4 from the
previous week's rig count.
The current nationwide rig count is more than double the lowest
level reached in recent years (876 in the week ended Jun 12, 2009)
and is above the prior-year level of 1,770. It rose to a 22-year
high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep
Rigs engaged in land operations fell by 5 to 1,796, offshore
drilling was up by 1 to 57 rigs, while inland waters activity
remained steady at 18 units.
Natural Gas Rig Count:
The natural gas rig count - which slumped to its lowest point last
month since May 1993 - was up by 4 to 315. As per the most recent
report, the number of natural gas-directed rigs is down 62% from
its recent peak of 811, achieved in 2012.
In fact, the current natural gas rig count is 81% below its
all-time high of 1,606 reached in late summer 2008. In the year-ago
period, there were 369 active natural gas rigs.
Oil Rig Count:
The oil rig count was down by 9 to 1,554. The current tally is way
above the previous year's rig count of 1,395. It has recovered
strongly from the low of 179 in Jun 2009, rising 8.7 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) rose by 1 to 2 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 11 to 366, 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 up by 7 to
Gulf of Mexico (GoM):
The GoM rig count was up by 2 to 57.
A Key Barometer of Drilling Activity: An increase or decrease in
the Baker Hughes rotary rig count heavily weighs on the demand for
energy services - drilling, completion, production, etc. - provided
by companies that include large-cap names like
However, our preferred pick in this group is
Flotek Industries Inc.
). The Houston, TX-based company - carrying a Zacks Rank #1 (Strong
Buy) - has a solid secular growth story with the potential to rise
significantly from the current level.
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