U.S. Rig Count Edges Lower - Analyst Blog

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported a marginal dip in the U.S. rig count (number of rigs searching for oil and gas in the country). This can be primarily attributed to a decrease in the tally of land rigs, partially offset by improved offshore rig count.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG) , Diamond Offshore (DO) , Noble Corp. (NE) , Nabors Industries (NBR) , Patterson-UTI Energy (PTEN) and Helmerich & Payne (HP) in gauging the overall business environment of the oil and gas industry.

Weekly Summary

Rigs engaged in exploration and production in the U.S. totaled 2,000 for the week ended November 25, 2011. This was down by 1 from the previous week's rig count and represents the third successive decline.

Despite this, the current nationwide rig count is more than double that of the 6-year low of 876 (in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,687. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations descended by 4 to 1,941, while offshore drilling was up by 3 to 39 rigs. Inland waters activity remained steady at 20 units.

Natural Gas Rig Count

The natural gas rig count decreased for the fourth week in a row to 865 (a drop of 6 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since January 29, 2010 and is down nearly 13% from its 2010 peak of 992, reached during mid-August.

The current natural gas rig count remains 46% below its all-time high of 1,606 reached in late summer 2008, but has rebounded strongly after bottoming out to a 7-year low of 665 on July 17, 2009. In the year-ago period, there were 953 active natural gas rigs.

Oil Rig Count

The oil rig count, which hit a 24-year high of 1,133 earlier this month, was up by 5 to 1,130. The current tally is way above the previous year's rig count of 724. It has recovered strongly from a low of 179 in June 2009, rising more than 6 times.

Miscellaneous Rig Count

The miscellaneous rig count (primarily drilling for geothermal energy) at 5 remained unchanged from the previous week.

Rig Count by Type

The number of vertical drilling rigs fell by 9 to 632, 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 8 at 1,368. In particular, horizontal rig units - that reached an all-time high of 1,157 in early November this year - rose by 8 from last week's level to 1,155.

BAKER-HUGHES ( BHI ): Free Stock Analysis Report

DIAMOND OFFSHOR ( DO ): Free Stock Analysis Report

HELMERICH&PAYNE ( HP ): Free Stock Analysis Report

NABORS IND ( NBR ): Free Stock Analysis Report

NOBLE CORP ( NE ): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): 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.

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

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