In its weekly release, Houston-based oilfield services company
Baker Hughes Inc.
) reported a rise in the U.S. rig count (number of rigs searching
for oil and gas in the country). This was due to increase in the
tally of both oil and gas-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
Weekly Summary: Rigs engaged in exploration and production in the
U.S. totaled 1,914 for the week ended Aug 29, 2014. This was up by
18 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 well above the prior-year level of 1,776. 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 ascended by 16 to 1,838, inland
waters activity was flat at 10 rigs, while offshore drilling rose
by 2 to 66 units.
Natural Gas Rig Count: The natural gas rig count - which slumped in
mid June to its lowest point since May 1993 - increased for the
fourth successive week to 338 (a gain of 8 rigs from the previous
week). Despite the weekly growth, the number of gas-directed rigs
is down by almost 60% from its recent peak of 811, reached in 2012.
In fact, the current natural gas rig count remains 80% below its
all-time high of 1,606 reached in late summer 2008. In the year-ago
period, there were 380 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 11 to 1,575. The current
tally is way above the previous year's rig count of 1,388. It has
recovered strongly from a low of 179 in June 2009, rising almost
Miscellaneous Rig Count: The miscellaneous rig count (primarily
drilling for geothermal energy) at one was down by one from the
Rig Count by Type: The number of vertical drilling rigs was up by 8
to 374, 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 10 to 1,540.
Gulf of Mexico (GoM): The GoM rig count rose by 1 to 63 units.
A Key Barometer of Drilling Activity: An increase or decrease in
the Baker Hughes rotary rig count heavily weighs upon the demand
for energy services - drilling, completion, production etc. -
provided by companies that include large-cap names like Halliburton
) and Schlumberger Ltd. (
However, our preferred pick in this group is Basic Energy Services
). The Fort Worth, TX-based firm - carrying a Zacks Rank #2 (Buy) -
has a solid secular growth story with the potential to rise from
the current level.
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BAKER-HUGHES (BHI): Free Stock Analysis Report
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