In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country), primarily reflecting an increase in the tally of land rigs.
Interestingly, for the third week in a row there continues to be more rigs drilling for oil than gas – the first time this has happened since 1995 – as companies look to capitalize on soaring oil prices, which are currently trending at around $100 a barrel.
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), Pride International (PDE), 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 1,836 for the week ended May 6, 2011. This is up by 18 from the previous week’s rig count and represents the highest level since December 5, 2008.
The current nationwide rig count is more than double that of the 6-year low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,492. It rose to a 22-year high in 2008, peaking to 2,031 in the weeks ending August 29 and September 12.
Rigs engaged in land operations climbed by 18 to 1,787, while offshore drilling increased by 1 to 30. However, inland waters activity descended by 1 to 19 rigs.
Natural Gas Rig Count
The natural gas rig count increased for the second consecutive week to 890 (a gain of 8 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down more than 10% from its 2010 peak of 992 reached during mid-August.
The current natural gas rig count remains 45% below its peak of 1,606 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 was up by 8 to 934. The current tally – the highest in 23 years – is considerably higher than the previous year’s rig count of 528. It has recovered strongly from a low of 179 in June 2009, rising more than 5 times.
Miscellaneous Rig Count
The miscellaneous rig count (primarily drilling for geothermal energy), at 12, was up by 2 from the previous week.
Rig Count by Type
The number of vertical drilling rigs fell by 3 to 573, 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 21 to 1,263. In particular, horizontal rig units rose by 15 in the latest week to hit a new all-time high of 1,038.
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
PRIDE INTL INC (PDE): Free Stock Analysis Report
PATTERSON-UTI (PTEN): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
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