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 primarily
attributed to a decrease in the tally of oil-directed rigs, while
natural gas rig count remained flat for the third successive
The Baker Hughes' data, issued since 1944, acts as an important
yardstick for drilling contractors like
Diamond Offshore Drilling Inc.
) , 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
1,765 for the week ended Jun 07, 2013. This was down by 6 from
the previous week's rig count and indicates the second decrease
in 3 weeks.
Despite this, 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 way below the prior-year level
of 1,984. 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 5 to 1,686, offshore
drilling was up by 1 to 56 rigs, while inland waters activity
decreased by 2 to 23 units.
Natural Gas Rig Count:
The natural gas rig count - which recently slumped to its lowest
point since Jun 1995 - remained steady for the third week in a
row at 354. The number of gas-directed rigs is down by 56% from
its 2012 peak of 811. 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 565 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 4 to 1,406. Moreover, the current tally
is now also below the previous year's rig count of 1,414.
However, it has recovered strongly from a low of 179 in Jun 2009,
rising 7.9 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 5 was down by 2 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 11 to 439, 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
5 to 1,326. In particular, horizontal rig units - that reached an
all-time high of 1,193 in May 2012 - fell by 1 from the last
week's level to 1,088.
As of now, Transocean, Diamond Offshore and Ensco are all Zacks
Rank #3 (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.
BAKER-HUGHES (BHI): Free Stock Analysis
DIAMOND OFFSHOR (DO): Free Stock Analysis
ENSCO PLC (ESV): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis
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