In its weekly release, Baker Hughes Company (BKR - Free Report) reported a drop in the U.S. rig count.
More on the 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 service player’s rotary rig count affects demand for energy services like drilling, completion and production, provided by the likes of Halliburton Company (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) and Transocean Ltd. (RIG - Free Report) .
Total US Rig Count Decreases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 254 in the week through Sep 11 versus the prior-week count of 256. Thus, in the past four weeks, the tally has declined for the first time. The current national rig count is also below the year-ago level’s886.
The number of onshore rigs in the week ending Sep 11 totaled 238, lower than the prior-week count of 240. However, the count of rigs operating in the inland waters was one, same as the prior-week tally. Notably, in the offshore resources, 15 rigs were operating, also flat with the prior-week count.
US Removes 1 Oil Rig: Oil rig count was 180 in the week through Sep 11, compared with 181 in the week ended Sep 4. Investors should also note that the current tally of oil rigs, far from the peak of 1,609 attained in October 2014, is also below the year-ago 733.
Natural Gas Rig Count Falls in US: The natural gas rig count of 71 was lower than the prior-week count of 72. Moreover, the count of rigs exploring the commodity is lower than the prior-year week’s 153. Importantly, per the latest report, the number of natural gas-directed rigs is 95.6% below the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 19 units, higher than the prior-week count of 16. However, the horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 235 was lower than the prior-week level of 240.
Gulf of Mexico (GoM) Rig Count Flat: The GoM rig count is 15 units, of which all were oil-directed. The count was in line with the prior-week count.
Rig Count in Prolific Basins
Permian — the most prolific basin in the United States — saw its weekly oil rig tally of 122, lower than the prior-week count of 124. Notably, the Marcellus basin saw the removal of two gas rigs in the week through Sep 11.
With oil prices recovering rapidly – the West Texas Intermediate (WTI) crude has improved more than 200% since late April – as economies are reopening, most analysts opine that drillers will again start adding rigs. Meanwhile, investors may keep an eye on 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.
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