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More Onshore Drillers Flock to Texas, Oklahoma and Colorado


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In its weekly release, Baker Hughes (BHGE), a GE company, reported an increase in total 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 1045 in the week (ended May 11), up from prior week's 1032. Notably, total count increased 10 times in the last 11 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 885.

For the week in discussion, the rise in rig count can be attributed to higher onshore and offshore operations. The tally for offshore rigs was recorded at 21 compared with 19 for the week ended May 4. Also, the number of onshore rigs totaled 1021, up from 1011.  

Three rigs operated in the inland waters last week, marginally higher than two in the week ended May 4.

Oil Rig Count: Oil rig count rose to 844 from 834 for the week ended May 4. Moreover, the current tally, though far from the peak of 1,609 attained in October 2014, is significantly higher than last year's 712. The oil rig count rose ninth time in the last 11 weeks.

Natural Gas Rig Count: The natural gas rig count of 199 is higher than 196 for the week ended May 4.

Moreover, like oil, the count of rigs exploring gas is above the year-ago tally of 172.

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 55 units is in line with the figure reported in the week ended May 4. 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) rose by 13 units to 990 units.

Gulf of Mexico (GoM): The GoM rig count is at 20 units - 19 rigs were oil-directed - higher than the tally of 19 for the week ended May 4.

Conclusion

The number of total rigs exploring in the United States has increased, courtesy of the addition of eight onshore rigs in Texas. The addition of three onshore rigs to each of Colorado and Oklahoma states also aided the rise.    

The West Texas Intermediate crude recently reached its highest point since November 2014, hitting $71.36 a barrel after President Trump's announcement that the United States will pull out of the Iran nuclear deal. Hence, the rally in crude has been highly supportive for drilling activities.

Two energy stocks that should make valuable additions to your portfolio are Bonanza Creek Energy, Inc. BCEI 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.

Bonanza Creek surpassed the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 215.4%.

Wildhorse Resource will likely see year-over-year earnings growth of 272.1% 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

Bonanza Creek Energy, Inc. (BCEI): 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 , BCEI



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