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 mainly
attributed to an increase in the tally of oil-directed rigs.
BAKER-HUGHES (BHI): Free Stock Analysis
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The Baker Hughes' data, issued since 1944, acts as an important
yardstick for drilling contractors like Transocean Ltd. (
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
1,771 for the week ended Apr 12, 2013. This was up by 33 from the
previous week's rig count and indicates the second increase in 3
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 1,950. 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 32 to 1,697, offshore
drilling was up by 1 to 49 rigs, while inland waters activity
remained steady at 25 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 4 weeks to
377 (a gain of 2 rigs from the previous week). Despite the weekly
improvement, the number of gas-directed rigs is down by 54% from
its 2012 peak of 811. In fact, the current natural gas rig count
remains 77% below its all-time high of 1,606 reached in late
summer 2008. In the year-ago period, there were 624 active
natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 in
August last year - jumped by 30 to 1,387. The current tally is
well above the previous year's rig count of 1,322. It has
recovered strongly from a low of 179 in June 2009, rising 7.7
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 7 was up by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs rose by 12 to 463, 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
21 to 1,308. In particular, horizontal rig units - that reached
an all-time high of 1,193 in May 2012 - rose by 18 from the last
week's level to 1,102.
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.