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,
partially offset by improvement in the miscellaneous rig count.
BAKER-HUGHES (BHI): 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
Weekly Summary: Rigs engaged in exploration and production in the
U.S. totaled 1,799 for the week ended December 14, 2012. This was
down by 1 from the previous week's rig count and indicates the
third 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 2,019.
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 3 to 1,729, offshore
drilling was up by 1 to 49 rigs while inland waters activity
nudged up by 1 to 21 units.
Natural Gas Rig Count: The natural gas rig count - which slumped
to a 13-year low in early November - decreased for the third
successive week to 416 (a drop of 1 rig from the previous week).
As per the most recent report, the number of gas-directed rigs is
down 56% 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 818 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 1 to 1,381. Nevertheless, the
current tally is way above the previous year's rig count of
1,196. It has recovered strongly from a low of 179 in June 2009,
rising almost 8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily
drilling for geothermal energy) at 2 was up by 1 from the
Rig Count by Type: The number of vertical drilling rigs fell by 2
to 504 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 1 to 1,295. In particular, horizontal rig units - that
reached an all-time high of 1,193 in May this year - increased by
2 from the last week's level to 1,105.
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 #4 Rank, which translates
into a short-term Sell rating, while Transocean's Zacks #2 Rank
implies that the offshore drilling contractor is likely to
outperform the broader U.S. equity market over the next one to