For Immediate Release
Chicago, IL - May 9, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
Baker Hughes Inc.
Helmerich & Payne
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Here are highlights from Tuesday's Analyst Blog:
Nat Gas Drilling Hits New 10-Yr Low
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 can be attributed to an
increase in the tally of oil-directed rigs, partially offset by
cutbacks in natural gas rig count.
In particular, the natural gas rig count dropped for the
fifteenth time in 17 weeks to touch a new 10-year low, while oil
drilling jumped to another 25-year high.
The Baker Hughes rig count, issued since 1944, acts as an
important yardstick for drilling contractors such as
Helmerich & Payne
), etc. in gauging the overall business environment of the oil and
Analysis of the Data
Rigs engaged in exploration and production in the U.S. totaled
1,965 for the week ended May 4, 2012. This was up by 20 from the
previous week's count and represents the sixth increase in the last
The current nationwide rig count is more than double that of the
6-year low of 876 (in the week ended June 12, 2009) and
significantly exceeds the prior-year level of 1,836. It rose to a
22-year high in 2008, peaking at 2,031 in the weeks ending August
29 and September 12.
Rigs engaged in land operations climbed by 21 to 1,899, while
offshore drilling was down by 1 to 44 rigs. Meanwhile, inland
waters activity remained steady at 22 units.
Natural Gas Rig Count:
The natural gas rig count decreased for the fifteenth time in 17
weeks to 606 (a drop of 7 rigs from the previous week). As per the
most recent report, the number of gas-directed rigs is at their
lowest level since April 5, 2002 and is down more than 35% from its
2011 peak of 936, reached during mid-October.
The current natural gas rig count remains 62% below its all-time
high of 1,606 reached in late summer 2008. In the year-ago period,
there were 890 active natural gas rigs.
Oil Rig Count:
The oil rig count was up by 27 to 1,355. The current tally - the
highest since Baker Hughes started breaking up oil and natural gas
rig counts in 1987 - is way above the previous year's rig count of
934. It has recovered strongly from a low of 179 in June 2009,
rising almost 7.6 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 4 remained unchanged from the previous week.
Rig Count by Type:
The number of vertical drilling rigs rose by 10 to 573, 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 at
1,392. In particular, horizontal rig units - that reached an
all-time high of 1,185 in January this year - increased by 19 from
last week's level to 1,158.
As mentioned above, the natural gas rig count has been falling
since the last few weeks, 328 rigs in fact (or 35%) from the recent
highs of 934 in October 28.
Is this bullish for natural gas fundamentals? The answer is
"no," if we look at the U.S. production and the shift in rig
With horizontal rig count - the technology responsible for the
abundant gas drilling in domestic shale basins - currently close to
its all-time high, output from these fields remains robust. As a
result, gas inventories still remain at elevated levels - up some
50% above the benchmark five-year average levels.
Hamstrung by this huge surplus, natural gas prices have dropped
more than 50% from 2011 peak of $4.92 per million Btu (MMBtu) in
June to the current level of around $2.35 (referring to spot prices
at the Henry Hub, the benchmark supply point in Louisiana).
Incidentally, prices hit a 10-year low of $1.82 last month.
To make matters worse, a near-record mild weather across most of
the country curbed natural gas demand for heating all winter,
leading to an early beginning for the stock-building season. The
grossly oversupplied market continues to pressure commodity prices
in the backdrop of sustained strong production.
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BAKER-HUGHES (BHI): Free Stock Analysis Report
DIAMOND OFFSHOR (DO): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
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