U.S. Rig Count Up to 1854

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI - Analyst Report) 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.

In particular, there were more rigs drilling for oil than gas for the seventh week in a row as the companies look to capitalizing 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 - Analyst Report), Diamond Offshore (DO - Analyst Report), Noble Corp. (NE - Analyst Report), Pride International (PDE), Nabors Industries (NBR - Analyst Report), Patterson-UTI Energy (PTEN - Analyst Report) and Helmerich & Payne (HP - Analyst Report) 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 1,854 for the week ended June 3, 2011. This is up by 7 from the previous week’s rig count and represents the highest level since November 26, 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 1,506. 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 climbed by 10 to 1,806, offshore drilling decreased by 2 to 33, while inland waters activity was down by 1 at 15 rigs.

Natural Gas Rig Count

The natural gas rig count, which slid to a 16-month low recently, increased for the second time in as many weeks to 887 (a gain of 6 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 all-time high of 1,606 reached back in late summer 2008, but have rebounded strongly after bottoming out to a 7-year low of 665 on July 17, 2009. In the year-ago period, there were 947 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 1 to 959. The current tally – the maximum in 23 years – is considerably higher than the previous year’s rig count of 545. 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 8, was unchanged from the previous week.

Rig Count by Type

The number of vertical drilling rigs rose by 12 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 down by 5 at 1,281. In particular, horizontal rig units came off by 3 from last week’s all-time high of 1,051.

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