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 both oil and natural gas-directed rigs, partially offset by improvement in the miscellaneous rig count.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors like 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 ) , Helmerich & Payne ( HP - 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 1,799 for the week ended December 14, 2012. This was down by 1 from the previous week’s rig count and indicates the third decrease in as many weeks.

Despite this, the current nationwide rig count is more than double than that of the 6-year low of 876 (in the week ended June 12, 2009), though it is way below the prior-year level of 2,019. 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 3 to 1,729, offshore drilling was up by 1 to 49 rigs while inland waters activity nudged up by 1 to 21 units.

Natural Gas Rig Count: The natural gas rig count – which slumped to a 13-year low in early November – decreased for the third successive week to 416 (a drop of 1 rig from the previous week). As per the most recent report, the number of gas-directed rigs is down 56% from its 2011 peak of 936.

The current natural gas rig count remains 74% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 818 active natural gas rigs.

Oil Rig Count: The oil rig count – which was at a 25-year high of 1,432 in August – inched down by 1 to 1,381. Nevertheless, the current tally is way above the previous year’s rig count of 1,196. It has recovered strongly from a low of 179 in June 2009, rising almost 8 times.

Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 2 was up by 1 from the previous week.

Rig Count by Type: The number of vertical drilling rigs fell by 2 to 504 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 1 to 1,295. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – increased by 2 from the last week’s level to 1,105.

Zacks Rank: Among the companies mentioned above, Diamond Offshore, Noble, Nabors, Patterson-UTI Energy and Helmerich & Payne are all Zacks #3 Rank (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.

However, Baker Hughes retains a Zacks #4 Rank, which translates into a short-term Sell rating, while Transocean’s Zacks #2 Rank implies that the offshore drilling contractor is likely to outperform the broader U.S. equity market over the next one to three months.