Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI - Analyst Report) reported a dip in the U.S. rig count (number of rigs searching for oil and gas in the country). This fall can be attributed to a decrease in the tally of oil-directed rigs.

The Baker Hughes’ data, issued since 1944, acts as an important yardstick for drilling contractors like Transocean Ltd. (RIG - Analyst Report) , Diamond Offshore Drilling Inc. (DO - Analyst Report) , Ensco plc (ESV - Analyst Report) , etc. in gauging the overall business environment of the oil and gas industry.

Analysis of the Data

Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,762 for the week ended May 24, 2013. This was down by 7 from the previous week’s rig count and indicates the first decrease in 4 weeks.

Despite this, the current nationwide rig count is more than double the lowest level reached in recent years (876 in the week ended Jun 12, 2009), though it is way below the prior-year level of 1,983. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep 12.

Rigs engaged in land operations descended by 8 to 1,685, offshore drilling was down by 1 to 51 rigs, while inland waters activity increased by 2 to 26 units.

Natural Gas Rig Count: The natural gas rig count – which recently slumped to its lowest point since Jun 1995 – remained steady at 354. The number of gas-directed rigs is down by 56% from its 2012 peak of 811. In fact, the current natural gas rig count remains 78% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 594 active natural gas rigs.

Oil Rig Count: The oil rig count – that rocketed to a 25-year high of 1,432 in Aug last year – fell by 6 to 1,402. Nevertheless, the current tally is above the previous year’s rig count of 1,383. It has recovered strongly from a low of 179 in Jun 2009, rising 7.8 times.

Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 6 was down by 1 from the previous week.

Rig Count by Type: The number of vertical drilling rigs fell by 5 to 457, 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 down by 2 to 1,305. In particular, horizontal rig units – that reached an all-time high of 1,193 in May 2012 – slipped by 9 from the last week’s level to 1,087.

Zacks Rank: As of now, Transocean, Diamond Offshore and Ensco are all Zacks Rank #3 (Hold) stocks, implying that these are expected to perform in line with the broader U.S. equity market over the next one to three months.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
VERTEX ENERG VTNR 8.28 +10.99%
MODINE MANUF MOD 17.19 +9.21%
CLAYTON WILL CWEI 140.21 +7.41%
KNIGHTSBRIDG VLCCF 13.26 +5.70%
CANADIAN SOL CSIQ 30.74 +5.24%