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DJ-Niobrara Basin Witnesses Addition of 2 Oil Drilling Rigs


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In its weekly release,  Baker Hughes, a GE company BHGE reported a rise 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 Rises:   Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1055 in the week ended Sep 14, higher than 1048 in the prior week. Notably, the rig count increased in five 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 936.

For the week under review, the rise in rig count can be attributed to increased onshore, offshore and inland water operations. The number of onshore rigs totaled 1030, up from 1026. Moreover, the tally for offshore rigs was 20, higher than the prior week's count of 19. Five rigs operated in the inland waters last week, up from three in the week ended Sep 7.   

U.S. Adds More Oil Rigs:  Oil rig tally was 867, up from 860 in the week ended Sep 7. This marks the highest count in four weeks. Moreover, the current total, though far from the peak of 1,609 attained in October 2014, is significantly higher than last year's 749. 

Natural Gas Rig Tally Flat in U.S.:  The natural gas rig count of 186 was in line with the tally for both the prior-year and prior-week. However, 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 63 units, down from the previous week's tally of 65. 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) increased by nine units to 992.

Gulf of Mexico (GoM) Witnesses More Rigs:  The GoM rig count is 18 units, of which, 16 were oil-directed. The count is higher than the tally of 17 for the week ended Sep 7. 

Conclusion

The number of rigs exploring Marcellus, DJ-Niobrara, Mississippian and Williston resources has risen. DJ-Niobrara added two oil rigs, while one oil rig was added in each of Mississippian and Williston basins. Marcellus shale play witnessed the addition of two natural gas rigs.

It is to be noted that several factors are currently impacting West Texas Intermediate (WTI) crude price movement. 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. This has been offset by concerns for crude demand following escalating tariff war tensions between the United States and China.   

Overall, the commodity pricing scenario is favorable for drillers given that oil price is almost near the $70-a-barrel psychological mark. Hence, we ask investors to consider oil explorers which will make valuable additions to their portfolios. Two such prospective stocks are Denbury Resources Inc.   DNR and Northern Oil and Gas, Inc.  NOG , with a Zacks Rank #2 (Buy). You can see  the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Denbury surpassed the Zacks Consensus Estimate in each of the last four quarters, the average positive earnings surprise being 162.9%.

We expect Northern Oil's earnings to skyrocket 278.6% year over year in 2018.

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Schlumberger Limited (SLB): Free Stock Analysis Report

Halliburton Company (HAL): Free Stock Analysis Report

Transocean Ltd. (RIG): Free Stock Analysis Report

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

Denbury Resources Inc. (DNR): Free Stock Analysis Report

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

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

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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: SLB , HAL , RIG , DO , DNR




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