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 upside can be attributed to
an increase in the tally of both oil and natural gas-directed
rigs. In particular, rigs working in the U.S. Gulf of Mexico
(GoM) jumped to its highest level in 4 years.
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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
1,791 for the week ended Aug 16, 2013. This was up by 13 from the
previous week's rig count and indicates the sixth increase in 7
The current nationwide rig count is more than 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 1,914. 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 9 to 1,706, inland
waters activity was down by 1 to 23 rigs, while offshore drilling
increased by 5 to 62 units.
Natural Gas Rig Count:
The natural gas rig count - which recently slumped to its lowest
point since Jun 1995 - increased for the sixth time in 8 weeks to
388 (a gain of 2 rigs from the previous week). Despite the weekly
growth, the number of gas-directed rigs is down by 52% from its
2012 peak of 811.
In fact, the current natural gas rig count remains 76% below its
all-time high of 1,606 reached in late summer 2008. In the
year-ago period, there were 484 active natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 a
year ago - jumped by 12 to 1,397. It has recovered strongly from
a low of 179 in Jun 2009, rising 7.8 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 6 was down by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 2 to 445, 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
15 to 1,346. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May 2012 - increased by 12 from the
last week's level to 1,077.
Gulf of Mexico (GoM):
The GoM rig count was up by 4 to 59, the highest level since Feb
2009. Oil drilling increased to 44 rigs from 42 a week ago, while
gas rigs improved upon their week-ago level by 2 to 15.
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
SEACOR Holdings Inc.
). The Fort Lauderdale, FL-based firm - sporting a Zacks Rank #1
(Strong Buy) - has a solid secular growth story with potential to
rise significantly from current level.