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 traced back to
a decrease in the tally of oil-directed rigs, partially offset by
higher gas rig count.
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
1,768 for the week ended Dec 20, 2013. This was down by 14 from
the previous week's rig count and indicates the first decrease in
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 still below the prior-year
level of 1,774. 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 16 to 1,687,
offshore drilling was up by 2 to 61 rigs, while inland waters
activity remained steady at 20 units.
Natural Gas Rig Count:
The natural gas rig count - which, earlier this year, slumped to
its lowest point since Jun 1995 - increased for the second time
in 3 weeks to 372 (a gain of 3 rigs from the previous week).
Despite the weekly growth, the number of gas-directed rigs is
down by 54% from its 2012 peak of 811.
In fact, the current natural gas rig count remains 77% below its
all-time high of 1,606 reached in late summer 2008. In the
year-ago period, there were 429 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 16 to 1,395. 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 1 was down by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 2 to 405, 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 12 to 1,363. In particular, horizontal rig units - that
reached an all-time high of 1,193 in May 2012 - decreased by 5
from the last week's level to 1,140.
Gulf of Mexico (GoM):
The GoM rig count was up by 2 to 59. Both oil and gas rigs
improved upon their week-ago levels by 1 to 39 and 20,
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
Core Laboratories N.V.
). The Amsterdam, Netherlands-based firm - sporting a Zacks Rank
#2 (Buy) - has a solid secular growth story with potential to
rise from the current level.
BAKER-HUGHES (BHI): Free Stock Analysis
CORE LABS NV (CLB): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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