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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 can be primarily attributed to a decrease in the tally of land rigs.

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), 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 2,016 for the week ended November 11, 2011. This is down by 10 from the previous week’s rig count and represents the second decrease in 4 weeks.

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 1,685. 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 14 to 1,960, inland waters activity increased by 1 to 19, while offshore drilling was up by 3 to 37 rigs.

Natural Gas Rig Count

The natural gas rig count decreased for the third time in 4 weeks to 877 (a drop of 30 rigs from the previous week). As per the most recent report, the number of gas-directed rigs – which slid to a 16-month low of 866 in May this year but recovered to reach a 10-month high of 936 last month – is down approximately 12% 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 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 955 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 21 to 1,133. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year’s rig count of 720. 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 6 was down by 1 from the previous week.

Rig Count by Type

The number of vertical drilling rigs rose by 7 to 633, 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 17 at 1,383. In particular, horizontal rig units came off by 5 from last week’s all-time high of 1,157.

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