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
a jump in the tally of oil-directed rigs, partially offset by
decrease in natural gas rig count.
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
1,748 for the week ended Mar 28, 2013. This was up by 2 from the
previous week's rig count and indicates the second increase in 3
The current nationwide rig count is almost 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 1,979. 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 1,680, offshore
drilling was down by 7 to 45 rigs, while inland waters activity
remained steady at 23 units.
Natural Gas Rig Count:
Natural gas rig count decreased for the second time in as many
weeks to 389 (a drop of 29 rigs from the previous week). As per
the most recent report, the number of gas-directed rigs is at
their lowest level since May 21, 1999 and is down 52% from its
2012 peak of 811.
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 658 active natural gas rigs.
Oil Rig Count:
The oil rig count - which was at a 25-year high of 1,432 in
August last year - jumped by 30 to 1,354. The current tally is
well above the previous year's rig count of 1,318. It has
recovered strongly from a low of 179 in June 2009, rising 7.6
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 5 was up by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs rose by 11 to 443, 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 1,305. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May 2012 - decreased by 1 from the
last week's level to 1,099.
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.
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
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