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Permian Oil Drilling Rig Tally Rises for 3 Consecutive 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, help 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 impacts 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 455 for the week through May 21compared with the prior-week figure of 453. The latest tally marked the highest count since April 2020. Moreover, the count has increased for four consecutive weeks. Notably, the current national rig count is above the year-ago level of 318.

The number of onshore rigs for the week ended May 21 totaled 440 versus the prior count of 437. In offshore resources, however, 14 rigs were operating, lower than the prior-week count of 15.

US Adds 4 Oil Rigs: Oil rig count was 356 for the week ended May 21 compared with 352 in the week ended May 14. Investors should also note that the current tally of oil rigs — far from the peak of 1,609 attained in October 2014 — is higher than the year-ago figure of 237.

Natural Gas Rig Count Decreases in US: Natural gas rig count of 99 fell from the prior-week count of 100. The decline in weekly count is the highest since July 2020. But, the count of rigs exploring the commodity was higher than the prior-year week’s 79. Per the latest report, the number of natural gas-directed rigs is almost 93.8% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 15 units, in line with the prior-week count. Notably, 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 440 compared favorably with the prior-week level of 438.

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

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 230 versus the prior-week count of 229. Thus, the tally for oil drilling rigs in the basin increased for three consecutive weeks.

Outlook

The price of West Texas Intermediate crude, trading at more than $64 per barrel mark, has improved drastically from the pandemic-hit April last year, when oil was in the negative territory. With coronavirus vaccines being rolled out at a massive scale, the demand for fuel will possibly improve further. This will likely encourage oil and gas drillers to continue adding rigs to shale plays.

Meanwhile, investors may keep an eye on two energy stocks that are expected to benefit if oil price continues to remain healthy — Whiting Petroleum Corporation (WLL - Free Report) and Matador Resources Company (MTDR - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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