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 rise can be traced back to
an increase in the tally of land-based 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
Weekly Summary: Rigs engaged in exploration and production in the
U.S. totaled 1,754 for the week ended Nov 8, 2013. This was up by
12 from the previous week's rig count.
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 below the prior-year level of 1,806. 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 increased by 13 to 1,679, inland
waters activity was flat at 17 rigs, while offshore drilling fell
by 1 to 58 units.
Natural Gas Rig Count: The natural gas rig count - which, earlier
this year, slumped to its lowest point since Jun 1995 - increased
to 365 (a gain of 5 rigs from the previous week). Despite the
weekly growth, the number of gas-directed rigs is down by 55%
from its 2012 peak of 811.
In fact, the current natural gas rig count is 77% below its
all-time high of 1,606 reached in late summer 2008. In the
corresponding year-ago week, there were 413 active natural gas
Oil Rig Count: The oil rig count - that rocketed to a 25-year
high of 1,432 in Aug last year - rose by 7 to 1,383.
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 6 was flat with the previous
Rig Count by Type: The number of vertical drilling rigs rose by 9
to 417, 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)
increased by 3 to 1,337. In particular, horizontal rig units -
that reached an all-time high of 1,193 in May 2012 - increased by
10 from the last week's level to 1,114.
Gulf of Mexico (GoM): The GoM rig count decreased by 1 to 56.
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 among
others - provided by companies that include large-cap names like
). However, our preferred pick in this group is
Emerge Energy Services LP Commo
). The Southlake, Texas-based firm - sporting a Zacks Rank #1
(Strong Buy) - has a solid secular growth story with the
potential to rise from the current level.
BAKER-HUGHES (BHI): Free Stock Analysis
EMERGE ENRG SVC (EMES): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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