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 both oil and gas-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
1,751 for the week ended Jan 3, 2014. This was down by 6 from the
previous week's rig count and indicates the third decrease in 3
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 still below the prior-year level of
1,762. 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 1,670, while
inland waters activity and offshore drilling remained steady at
20 to 61 units, respectively.
Natural Gas Rig Count:
The natural gas rig count - which last year slumped to its lowest
point since Jun 1995 - decreased for the first time in 3 weeks to
372 (a drop of 2 rigs from the previous week). As per the most
recent report, the number of gas-directed rigs is down by 54%
from its recent peak of 811, achieved in 2012.
Moreover, 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 439 active natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 in
Aug 2012 - fell by 4 to 1,378. 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 1 remained unchanged from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 10 to 377, 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 1,374. In particular, horizontal rig units - that reached an
all-time high of 1,193 in May 2012 - increased by 2 from the last
week's level to 1,148.
Gulf of Mexico (GoM):
The GoM rig count was remained steady at 59. Both oil and gas
rigs were unchanged from their week-ago levels of 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
To read this article on Zacks.com click here.