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 both oil and natural gas-directed rigs.
In particular, the number of rigs looking for natural gas fell to
a new 18- year low.
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
To read this article on Zacks.com click here.
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
1,759 for the week ended Jun 21, 2013. This was down by 12 from
the previous week's rig count and indicates the second decrease
in 3 weeks.
Despite this, 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 1,966. 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 12 to 1,682, while
inland waters activity offshore drilling remained steady at 23 to
54 rigs, respectively.
Natural Gas Rig Count:
Natural gas rig count decreased for the second successive week to
349 (a drop of 4 rigs from the previous week). As per the most
recent report, the number of natural gas-directed rigs is at
their lowest level since Jun 16, 1995 and is down 57% from its
2012 peak of 811. In fact, the current natural gas rig count
remains 78% below its all-time high of 1,606 reached in late
summer 2008. In the year-ago period, there were 541 active
natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 in
Aug last year - fell by 8 to 1,405 and is currently below the
previous year's rig count of 1,421. Nevertheless, it has
recovered strongly from a low of 179 in Jun 2009, rising 7.8
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 5 remained unchanged from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 3 to 438, 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 9 to 1,321. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May 2012 - decreased by 7 from the
last week's level to 1,079.
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.