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US Oil & Gas Rig Tally Rises for 2 Straight Weeks: Here's Why

In its weekly release, Baker Hughes Company BKR reported that the U.S. rig count has increased from the prior week.

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 service player’s rotary rig count impacts demand for energy services like drilling completion and production, provided by the likes of Halliburton Company HALSchlumberger Limited SLB and Transocean Ltd. RIG.

Details

Total US Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 479 for the week through Jul 9,higher than the prior-week count of 475. Thus, the tally has increased consecutively in the past two weeks, thanks to massively improving oil price. Also, the count is the highest since April 2020. Notably, the current national rig count is higher than the year-ago level of 258.

The number of onshore rigs for the week ended Jul 9 totaled 461, higher than the prior-week count of 459. Notably, in offshore resources, 17 rigs were operating, higher than the prior-week count of 14.

US Oil Rig Count Increases: Oil rig count was 378 for the week ended Jul 9, higher than the prior-week count of 376. Investors should also note that the current tally of oil rigs — far from the peak of 1,609 attained in October 2014 — is also higher than the year-ago figure of 181.

Natural Gas Rig Count Rises in US: Natural gas rig count of 101 increased from the prior-week count of 99. Moreover, the count of rigs exploring the commodity was higher than the prior-year week’s 75. Per the latest report, the number of natural gas-directed rigs is almost 94% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 15 units, lower than the prior-week count of 16. However, 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) of 464 compared favorably with the prior-week level of 459.

Gulf of Mexico (GoM) Rig Count Increases: GoM rig count was 17 units, of which all were oil-directed. The count was higher than the prior-week tally of 14.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 237, in line with the prior-week count. Importantly, the tally for oil drilling rigs in the basin increased in seven of the prior 10 weeks. In Utica, the tally for natural gas drilling rigs increased to 10 from the prior count of nine.

Outlook

The price of West Texas Intermediate crude, trading at more than $73 per barrel mark, has improved drastically from the pandemic-hit April last year, when oil was in the negative territory. With coronavirus vaccines being rolled out at a massive scale, the demand for fuel will possibly improve further. This has paved the way for further rig additions although drilling activities have slowed down as upstream players are focusing mainly on stockholder returns rather than boosting output.

Meanwhile, investors may keep an eye on two energy stocks that are expected to benefit if oil price continues to stay healthy — Whiting Petroleum Corporation WLL and Earthstone Energy, Inc. ESTE. While Whiting Petroleum sports a Zacks Rank #1 (Strong Buy), Earthstone Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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Transocean Ltd. (RIG): Free Stock Analysis Report

Schlumberger Limited (SLB): Free Stock Analysis Report

Halliburton Company (HAL): Free Stock Analysis Report

Baker Hughes Company (BKR): Free Stock Analysis Report

Whiting Petroleum Corporation (WLL): Free Stock Analysis Report

Earthstone Energy, Inc. (ESTE): 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.

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