In its weekly release, Houston-based oilfield services company
Baker Hughes Inc. ( BHI ) reported a rise
in the U.S. rig count (number of rigs searching for oil and gas in
the country). This upside can be mainly attributed to an increase
in the tally of oil-directed rigs, partially offset by lower
natural gas rig count that fell to its lowest level in nearly 18
years.BAKER-HUGHES (BHI): Free Stock Analysis ReportDIAMOND OFFSHOR (DO): Free Stock Analysis
ReportENSCO PLC (ESV): Free Stock Analysis ReportTRANSOCEAN LTD (RIG): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
The Baker Hughes' data, issued since 1944, acts as an important
yardstick for drilling contractors like Transocean
Ltd. ( RIG
) , Diamond Offshore Drilling Inc. ( DO ) , Ensco
plc ( ESV )
, etc. in gauging the overall business environment of the oil and
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and
production in the U.S. totaled 1,764 for the week ended May 3,
2013. This was up by 10 from the previous week's rig count and
indicates the first increase in 3 weeks.
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 1,965. 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 1,690, offshore
drilling was up by 2 to 51 rigs, while inland waters activity
decreased by 1 to 23 units.
Natural Gas Rig Count: Natural gas rig count
decreased for the second time in as many weeks to 354 (a drop of 12
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 56% from its 2012 peak of 811.
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 606 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 - jumped by 22 to
1,403. The current tally is well above the previous year's rig
count of 1,355. 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 7 remained
unchanged from the previous week.
Rig Count by Type: The number of vertical
drilling rigs rose by 4 to 475, 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 6 to 1,289. In particular,
horizontal rig units - that reached an all-time high of 1,193 in
May 2012 - rose by 8 from the last week's level to 1,092.
Zacks Rank: 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.