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 attributed to
an increase in the tally of gas-directed rigs, partially offset
by decrease in oil and miscellaneous rig counts.
BAKER-HUGHES (BHI): Free Stock Analysis
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HELMERICH&PAYNE (HP): Free Stock Analysis
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PATTERSON-UTI (PTEN): Free Stock Analysis
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The Baker Hughes rig count, issued since 1944, acts as an
important yardstick for drilling contractors such as
Helmerich & Payne
), 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
1,817 for the week ended November 21, 2012. This was up by 8 from
the previous week's rig count and indicates the third increase in
as many weeks.
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 2,000. It rose to a 22-year
high in 2008, peaking at 2,031 in the weeks ending August 29 and
Rigs engaged in land operations climbed by 5 to 1,745, offshore
drilling was up by 3 to 53 rigs, while inland waters activity
remained steady at 19 units.
Natural Gas Rig Count:
The natural gas rig count - which slumped to a 13-year low in
early November - increased for the second successive week to 428
(a gain of 11 rigs from the previous week). Despite the weekly
improvement, the number of gas-directed rigs is down 54% from its
2011 peak of 936, reached during mid-October.
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 865 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 2 to 1,388. Nevertheless, the current
tally is way above the previous year's rig count of 1,130. It has
recovered strongly from a low of 179 in June 2009, rising almost
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 1 was down by 1 from the previous week.
Rig Count by Type:
The number of vertical drilling rigs fell by 1 to 509, 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
9 to 1,308. In particular, horizontal rig units - that reached an
all-time high of 1,193 in May this year - increased by 9 from the
last week's level to 1,114.
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
means that the offshore drilling contractor is likely to
outperform the broader U.S. equity market over the next one to