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Eagle Ford & Cana Woodford Continue to Witness More Oil Rigs


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In its weekly release, Baker Hughes (BHGE), a GE company, reported an increase in rig count in the United States.

About 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.

Change in this Houston-based oilfield services player's 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

Weekly Summary:  Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1060 in the week (ended Jun 1) compared with the prior week's 1059. Notably, total count increased 11 times in the last 12 weeks.

Since it slipped to an all-time low of 404 in May 2016, rig count has been rising rapidly in U.S. shale resources. Punctuated by a few pauses, the current nationwide rig count is considerably higher than the prior-year level of 916.   

For the week in discussion, the rise in rig count can be attributed to higher onshore operations. The number of onshore rigs totaled 1039, marginally higher than 1036. The tally for offshore rigs was recorded at 19, in line with the count for the week ended May 25.

Two rigs operated in the inland waters last week, however, came lower than four for the prior week.

Oil Rig Count:  Oil rig count was 861, up from 859 for the week ended May 25. Moreover, the current tally, though far from the peak of 1,609 attained in October 2014, is significantly higher than last year's 733. The oil rig count rose 10 times in the last 12 weeks.

Natural Gas Rig Count:  The natural gas rig count of 197 is lower than 198 for the week ended May 25. However, like oil, the count of rigs exploring gas is above the year-ago tally of 182.

Per the recent report, the number of natural gas-directed rigs is 88% below the all-time high of 1,606 achieved in late summer 2008.

Rig Count by Type:  The number of vertical drilling rigs of 66 units remained in line with the prior week. 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) increased by an unit to 994 units.   

Gulf of Mexico (GoM):  The GoM rig count is at 18 units - 15 rigs were oil-directed - in line with the tally for the week ended May 25.

Conclusion

The number of rigs exploring in the United States has increased, courtesy of the addition of three oil rigs in Cana Woodford and two in Eagle Ford. In the Cana Woodford, oil rigs have been increasing for four weeks in a row. Eagle Ford has also been witnessing the same over the past two weeks.

West Texas Intermediate (WTI) crude recently fell marginally below the $65-a-barrel psychological mark as there are possibilities that Saudi Arabia and Russia will decide to relax the production cut quota in the OPEC meeting. However, considering the current crude pricing scenario, there is room for ramping up oil and gas drilling activities. 

Two energy stocks that should make valuable additions to your portfolio are Anadarko Petroleum Corporation APC and Wildhorse Resource Development Corporation WRD . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here .

We expect Anadarko Petroleum to witness year-over-year earnings growth of 229.6% in 2018.

Wildhorse will likely see year-over-year earnings growth of 309.3% 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

Anadarko Petroleum Corporation (APC): Free Stock Analysis Report

Wildhorse Resource Development Corporation (WRD): 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 , APC



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