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 attributed to a
decrease in the tally of both oil and natural gas-directed rigs.
BAKER-HUGHES (BHI): Free Stock Analysis
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HELMERICH&PAYNE (HP): Free Stock Analysis
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PATTERSON-UTI (PTEN): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
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The Baker Hughes rig count, issued since 1944, acts as an
important yardstick for drilling contractors like
Helmerich & Payne
), etc. 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
1,800 for the week ended December 7, 2012. This was down by 11
from the previous week's rig count and indicates the second
decrease in as many weeks.
Despite this, the current nationwide rig count is more than
double than that of the 6-year low of 876 (in the week ended June
12, 2009), though it is way below the prior-year level of 1,987.
It rose to a 22-year high in 2008, peaking at 2,031 in the weeks
ending August 29 and September 12.
Rigs engaged in land operations descended by 9 to 1,732, offshore
drilling was down by 2 to 48 rigs while inland waters activity
remained steady at 20 units.
Natural Gas Rig Count:
The natural gas rig count - which slumped to a 13-year low in
early November - decreased for the second successive week to 417
(a drop of 7 rigs from the previous week). As per the most recent
report, the number of gas-directed rigs is down 55% from its 2011
peak of 936.
The current natural gas rig count remains 74% below its all-time
high of 1,606 reached in late summer 2008. In the year-ago
period, there were 820 active natural gas rigs.
Oil Rig Count:
The oil rig count - which was at a 25-year high of 1,432 in
August - inched down by 4 to 1,382. Nevertheless, the current
tally is way above the previous year's rig count of 1,161. It has
recovered strongly from a low of 179 in June 2009, rising almost
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 2 to 506 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 9 to 1,294. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May this year - decreased by 7 from
the last week's level to 1,103.
Among the companies mentioned above, Diamond Offshore, Noble,
Nabors, Patterson-UTI Energy and Helmerich & Payne are all
Zacks #3 Rank (Hold) stocks, implying that these are expected to
perform in line with the broader U.S. equity market over the next
one to three months.
However, Baker Hughes retains a Zacks #5 Rank, which translates
into a short-term Strong Sell rating, while Transocean's Zacks #2
Rank means that the offshore drilling contractor is likely to
outperform the broader U.S. equity market over the next one to