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
1,739 for the week ended Oct 18, 2013. This was down by 4 from
the previous week's rig count and indicates the fourth decrease
in 5 weeks.
Despite this, 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
1,839. 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 6 to 1,662, inland
waters activity was up by 2 to 19 rigs, while offshore drilling
remained steady at 58 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 427 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 6 to 1,361. Nevertheless, it has
recovered strongly from a low of 179 in Jun 2009, rising 7.6
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 6 was down by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 8 to 401, 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
4 to 1,338. In particular, horizontal rig units - that reached an
all-time high of 1,193 in May 2012 - decreased by 7 from the last
week's level to 1,099.
Gulf of Mexico (GoM):
The GoM rig count remained steady at 56. Oil drilling decreased
to 38 rigs from 39 a week ago, offset by a rise in the number of
gas rigs (from 17 to 18).
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
GulfMark Offshore Inc.
). The Houston, TX-based firm - sporting a Zacks Rank #2 (Buy) -
has a solid secular growth story with potential to rise from the
BAKER-HUGHES (BHI): Free Stock Analysis
GULFMARK OFFSHR (GLF): Free Stock Analysis
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