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 upside can be traced back
to an increase in the tally of both oil and gas-directed rigs.
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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
1,785 for the week ended Jan 31, 2014. This was up by 8 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) and is above the prior-year level of 1,764. 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 ascended by 7 to 1,708, offshore
drilling rose by 1 to 57, while inland waters activity remained
steady at 20 units, respectively.
Natural Gas Rig Count:
The natural gas rig count - which last year slumped to its lowest
point since Jun 1995 - increased to 358 (2 rigs more than the
previous week). Despite the weekly growth, the number of
gas-directed rigs is down 56% from its peak of 811, achieved in
In fact, the current natural gas rig count remains 78% below its
all-time high of 1,606 reached in late summer 2008. In the
year-ago period, there were 428 active natural gas rigs.
Oil Rig Count: The oil rig count - that rocketed to a 25-year
high of 1,432 in Aug 2012 - jumped by 6 to 1,422. It has
recovered strongly from a low of 179 in Jun 2009, rising 7.9
times. The current tally is also above the previous year's rig
count of 1,332.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 5 was flat with the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 4 to 392, 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 12 to 1,393.
Gulf of Mexico (GoM):
The GoM rig count was rose by 1 from its week-ago levels to 57.
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
). However, our preferred pick in this group is
Emerge Energy Services LP
). The Southlake, Texas-based firm - carrying a Zacks Rank #2
(Buy) - has a solid secular growth story with potential to rise
from the current level.