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 both oil and natural gas-directed
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
1,770 for the week ended Jul 19, 2013. This was up by 11 from the
previous week's rig count and indicates the third 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), though it is way below the prior-year level of 1,935. 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 11 to 1,691, while
inland waters activity offshore drilling remained steady at 22 to
57 rigs, respectively.
Natural Gas Rig Count:
The natural gas rig count - which recently slumped to its lowest
point since Jun 1995 - increased for the fourth successive week
to 369 (a gain of 7 rigs from the previous week). Despite the
weekly improvement, the number of gas-directed rigs is down by
55% 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 518 active natural gas rigs.
Oil Rig Count:
The oil rig count - that rocketed to a 25-year high of 1,432 in
Aug last year - jumped by 4 to 1,395. It has recovered strongly
from a low of 179 in Jun 2009, rising 7.8 times. However, the
current tally is below the previous year's rig count of 1,414.
Miscellaneous Rig Count:
The miscellaneous rig count (primarily drilling for geothermal
energy) at 6 remained unchanged from the previous week.
Rig Count by Type:
The number of vertical drilling rigs remained static at 432,
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 11 to 1,338.
Gulf of Mexico (GoM):
The GoM rig count was down by 1 to 54. Oil drilling decreased to
39 rigs from 40 a week ago, though the number of gas rigs
remained flat 15.
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
). However, our preferred pick in this group is
GulfMark Offshore Inc.
). The Houston, TX-based firm - sporting a Zacks Rank #1 (Strong
Buy) - has a solid secular growth story with potential to rise
significantly from current level.
BAKER-HUGHES (BHI): Free Stock Analysis
GULFMARK OFFSHR (GLF): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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