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 can be primarily attributed
to an increase in the tally of gas-directed rigs.
The Baker Hughes data, issued since 1944, acts as an important
yardstick for energy service providers 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
1,913 for the week ended Aug 15, 2014. This was up by 5 from the
previous week's rig count and indicates the fourth increase in as
The current nationwide rig count is more than double the lowest
level reached in recent years (876 in the week ended Jun 12, 2009)
and is well above the prior-year level of 1,791. 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 9 to 1,841, inland
waters activity was down by 4 to 10 rigs, while offshore drilling
remained steady at 62 units.
Natural Gas Rig Count:
The natural gas rig count - which in mid-June slumped to its lowest
point since May 1993 - increased for the second successive week to
321 (a gain of 5 rigs from the previous week). Despite the weekly
growth, the number of gas-directed rigs is down by 60% from its
recent peak of 811, achieved in 2012.
In fact, the current natural gas rig count remains 80% below its
all-time high of 1,606 reached in late summer 2008. In the year-ago
period, there were 388 active natural gas rigs.
Oil Rig Count:
The oil rig count was up by 1 to 1,589. The current tally - the
highest since Baker Hughes started breaking up oil and natural gas
rig counts in 1987 - is way above the previous year's rig count of
1,397. It has recovered strongly from a low of 179 in June 2009,
rising 8.9 times.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 3 was down by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 10 to 368, 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
1,545. However, horizontal rig units increased by 12 from the last
week's level to reach an all-time high of 1,329.
Gulf of Mexico (GoM):
The GoM rig count remained flat at 60. The number of oil drilling
rigs improved by 1 to 44, offset by a unit decrease in gas rigs to
A Key Barometer of Drilling Activity: An increase or decrease in
the Baker Hughes rotary rig count heavily weighs on the demand for
energy services - drilling, completion, production etc. - provided
by companies that include large-cap names like Halliburton Co. (
) and Schlumberger Ltd. (
However, our preferred pick in this group Basic Energy Services
). The Fort Worth, TX-based firm - carrying a Zacks Rank #2 (Buy) -
has a solid secular growth story with potential to rise from the
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