Baker Hughes Company (BKR - Free Report) recently announced the rig count for August. In the United States, the total rig number fell from the July 2020 figure due to a drop in count of onshore rigs. This marked the sixth consecutive decline in the U.S. monthly rig count.
Precisely, with the coronavirus pandemic denting global energy demand, explorers and producers are getting little incentive to invest in drilling activities and are thereby curtailing capital budget. Thus, lower spending by upstream energy players has forced drillers to remove rigs from oil and gas patches.
More on Rig Count
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry.
A change in the Houston-based oilfield services players’ rotary rig count affects demand for energy services like drilling, completion and production provided by companies like Halliburton Company (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) and Transocean Ltd. (RIG - Free Report) .
Analysis of the Data
North America Rig Count
In August 2020, rig count in North America (the United States and Canada) totaled 303. The figure was higher than 287 in July 2020 but lower than 1,068 a year ago.
U.S. rig: Total number of rigs in the United States was 250. The figure is lower than 255 rigs in July and 926 a year ago.
Of the total count, land rig count was 237. This is lower than 243 rigs in the prior month and 900 rigs a year ago.
The number of U.S. offshore rigs in August 2020 was 13 compared with 12 in July 2020 and 26 in August 2019.
Canada rig: In Canada, the total rig count of 53 was higher than 32 in July 2020 but lower than 142 in August 2019.
International Rig Count
Total international rig count (offshore and land) in the month of August was 747. The tally increased by four from July 2020. However, the figure was lower than 1,138 recorded in August 2019.
Offshore rig: The offshore rig count in August 2020 was 184 compared with 183 in July 2020 and 244 in the prior-year period.
Land Rig: The land rig count was 563 compared with 560 in July 2020 and 894 in August 2019.
With oil prices recovering gradually – West Texas Intermediate crude has recovered more than 234% since late-April – most analysts opine that the decline in the tally of monthly rig in the United States will narrow down further. In fact, some analysts believe that if the recovery sustains, since more people are getting back to work on easing lockdown measures, many explorers will consider adding rigs.
Meanwhile, investors may consider two energy stocks which are expected to benefit if the oil price rally sustains – Devon Energy Corporation (DVN - Free Report) and Diamondback Energy Inc. (FANG - Free Report) . Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>