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.
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
1,776 for the week ended Aug 23, 2013. This was down by 15 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 1,898. 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 14 to 1,692, inland
waters activity was down by 1 to 22 rigs, while offshore drilling
remained steady at 62 units.
Natural Gas Rig Count:
The natural gas rig count - which recently slumped to its lowest
point since Jun 1995 - decreased for the second time in 3 weeks
to 387 (a drop of 1 rig from the previous week). As per the most
recent report, the number of gas-directed rigs is down by 52%
from its 2012 peak of 811. Moreover, 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 486 active
natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 a
year ago - fell by 15 to 1,382. Nevertheless, it has recovered
strongly from a low of 179 in Jun 2009, rising 7.7 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 7 was up by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs remained flat at 445, 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 15 to 1,331. In particular, horizontal rig units - that
reached an all-time high of 1,193 in May 2012 - decreased by 2
from the last week's level to 1,075.
Gulf of Mexico (GoM):
The GoM rig count remained steady at 59. Oil drilling decreased
to 43 rigs from 44 a week ago, offset by a rise in the number of
gas rigs (from 15 to 16).
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
SEACOR Holdings Inc.
). The Fort Lauderdale, FL-based firm - sporting a Zacks Rank #1
(Strong Buy) - has a solid secular growth story with potential to
rise significantly from the current level.
BAKER-HUGHES (BHI): Free Stock Analysis
SEACOR HLDGS (CKH): Get Free Report
HALLIBURTON CO (HAL): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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