In its weekly release, Houston-based oilfield services company
Baker Hughes Inc.
) reported a jump in the U.S. rig count (number of rigs searching
for oil and gas in the country). This upside can be attributed to
an increase in the tally of gas-directed rigs.
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
1,776 for the week ended Mar 15, 2013. This was up by 24 from the
previous week's rig count and indicates the first increase in 4
The current nationwide rig count is more than double that of the
lowest level reached in recent years (876 in the week ended June
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 ascended by 19 to 1,701, offshore
drilling was up by 2 to 53 rigs, while inland waters activity
increased by 3 to 22 units.
Natural Gas Rig Count:
The natural gas rig count - which recently slumped to its lowest
point since May 1999 - increased for the first time in 3 weeks to
431 (a gain of 24 rigs from the previous week). Despite the
weekly improvement, the number of gas-directed rigs is down by
47% from its 2012 peak of 811. In fact, the current natural gas
rig count remains 73% below its all-time high of 1,606 reached in
late summer 2008. In the year-ago period, there were 663 active
natural gas rigs.
Oil Rig Count:
The oil rig count - which was at a 25-year high of 1,432 in
August last year - remained static at 1,341. The current tally is
well above the previous year's rig count of 1,317. It has
recovered strongly from a low of 179 in June 2009, rising 7.5
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 4 remained unchanged from the previous week.
Rig Count by Type:
The number of vertical drilling rigs rose by 9 to 436 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
15 to 1,340. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May 2012 - increased by 1 from the
last week's level to 1,131.
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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