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Cana Woodford Basin Witnesses Removal of 6 Oil Drilling Rigs


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In its weekly release,  Baker Hughes, a GE company BHGE reported a decline in U.S. rig count.   

More on the Rig Count

Baker Hughes' data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry.

A change in the Houston-based oilfield services players' rotary rig count impacts demand for energy services like drilling, completion and production provided by the likes of Halliburton Company HAL , Schlumberger Limited SLB , Diamond Offshore Drilling, Inc. DO and Transocean Ltd. RIG .

Details

Total U.S. Rig Count Declines:   Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1053 in the week ended Sep 21, lower than 1055      in the prior week. Notably, the rig count decreased in only four of the last 10 weeks.

Despite the rig count slipping to an all-time low of 404 in May 2016, it has been rising rapidly in U.S. shale resources. The current national rig count is considerably higher than the prior-year level of 935.  

For the week under review, the fall in rig count can be attributed to decreased onshore operations. The number of onshore rigs totaled 1028, down from 1030. However, the tallies for both offshore and inland water rigs were in line with the counts for the week ended Sep 14. Five rigs operated in the inland waters last week, while the number of offshore rigs were 20.

U.S. Removes One Oil Rig:  Oil rig tally was 866, down from 867 in the week ended Sep 14. However, the current total, though far from the peak of 1,609 attained in October 2014, is significantly higher than last year's 744.   

Natural Gas Rig Tally Flat in U.S.:  The natural gas rig count of 186 was in line with the tally for the prior week.

However, unlike oil, the count of rigs exploring the commodity is below the prior-year number of 190. Moreover, per the recent report, the number of natural gas-directed rigs is 88.4%, below the all-time high of 1,606 in 2008.

Rig Count by Type:  The number of vertical drilling rigs totaled 65 units, up from the previous week's 63. However, the horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations also known as shale formations) decreased by four units to 988.

Gulf of Mexico (GoM) Rig Count In line:  The GoM rig count is 18 units, of which, 16 were oil-directed. The count is in line with the tally for the week ended Sep 14. 

Conclusion

The number of rigs exploring Cana Woodford, Utica and Williston resources has declined. Cana Woodford removed six oil rigs, while one oil rig was removed in each of Williston basin and Utica shale plays.

Meanwhile, the West Texas Intermediate (WTI) crude pricing scenario is favorable for drillers given that the commodity is trading above the $70-a-barrel psychological mark. The sanctions by the United States on the export of Iranian oil, which is likely to get implemented on Nov 4, is backing oil price.

Hence, we ask investors to consider oil explorers which will make valuable additions to their portfolios. Two such prospective stocks are Magnolia Oil & Gas Corporation MGY and Northern Oil and Gas, Inc.  NOG . Magnolia sports a Zacks Rank #1 (Strong Buy), while Northern Oil carries a Zacks Rank #2 (Buy). You can see  the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate of Magnolia's 2018 earnings has been revised upward over the past 60 days.   

We expect Northern Oil's earnings to skyrocket 292.9% year over year in 2018.

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Halliburton Company (HAL): Free Stock Analysis Report

Schlumberger Limited (SLB): Free Stock Analysis Report

Transocean Ltd. (RIG): Free Stock Analysis Report

Diamond Offshore Drilling, Inc. (DO): Free Stock Analysis Report

Northern Oil and Gas, Inc. (NOG): Free Stock Analysis Report

Baker Hughes, a GE company (BHGE): Free Stock Analysis Report

Magnolia Oil & Gas Corp (MGY): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: HAL , SLB , RIG , DO , NOG



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