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US Oil & Gas Rig Tally Increases in 3 of 5 Weeks

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In its weekly release, Baker Hughes Company (BKR - Free Report) reported an increase 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) .

Details

Total US Rig Count Increases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 255 in the week through Sep 18 versus the prior-week count of 254. Thus, in the past five weeks, the tally has increased three times. The current national rig count is, however, below the year-ago level’s868.

The number of onshore rigs in the week ending Sep 18 totaled 240, higher than the prior-week count of 238. Notably, the count of rigs operating in the inland waters was one, same as the prior-week tally. However, in the offshore resources, 14 rigs were operating, lower than the prior-week count of 15.

US Removes 1 Oil Rig: Oil rig count was 179 in the week through Sep 18, compared with 180 in the week ended Sep 11. Since mid-August, the tally has been the lowest. 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 719.

Natural Gas Rig Count Rises in US: The natural gas rig count of 73 was higher than the prior-week count of 71. However, the count of rigs exploring the commodity is lower than the prior-year week’s 148. Importantly, per the latest report, the number of natural gas-directed rigs is 95.5% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 17 units, lower than the prior-week count of 19. 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 238 was higher than the prior-week level of 235.

Gulf of Mexico (GoM) Rig Count Declines: The GoM rig count is 14 units, of which all were oil-directed. The count was lower than the prior-week count of 15.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — saw its weekly oil rig tally of 121, lower than the prior-week count of 122. However, the Marcellus basin saw the addition of one gas rig in the week through Sep 18.

Outlook

With oil prices recovering rapidly – the West Texas Intermediate (WTI) crude has improved more than 214% since late April – with reopening economies, most analysts opine that drillers will continue to add 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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