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US Oil & Gas Rig Tally Rises for 3 Straight Weeks: Here's Why

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In its weekly release, Baker Hughes Company (BKR - Free Report) reported an increase in the U.S. rig count from the prior week.

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 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 Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 503 for the week through Aug 20,higher than the prior-week count of 500. Thus, the tally has increased for three successive weeks, thanks to a massive recovery in oil price. The count is the highest since April 2020. The current national rig count is higher than the year-ago level of 254.

The number of onshore rigs for the week ended Aug 20 totaled 485, higher than the prior-week count of 484. In offshore resources, 15 rigs were operating, higher than the prior-week count of 14.

US Oil Rig Count Increases: Oil rig count was 405 for the week ended Aug 20, higher than the prior-week count of 397. 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 183.

Natural Gas Rig Count Slips in US: Natural gas rig count of 97 decreased from the prior-week count of 102. The count of rigs exploring the commodity was, however, higher than the prior-year week’s 69. Per the latest report, the number of natural gas-directed rigs is 94% 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 17. 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 484 compared favorably with the prior-week level of 483.

Gulf of Mexico (GoM) Rig Count Increases: GoM rig count was 14 units, of which all were oil-directed. The count was higher than the prior-week tally of 13.

Rig Count in Prolific Basin

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 246, higher than the prior-week count of 244. The tally for oil drilling rigs in the basin increased for two straight weeks.

Outlook

Although the price of West Texas Intermediate crude, trading at more than $60 per barrel mark, has declined in the past several days, the commodity’s price is still significantly higher than 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 has paved the way for further rig additions although drilling activities have slowed down as upstream players are focusing mainly on stockholder returns rather than boosting output.

Meanwhile, investors may keep an eye on two energy stocks that are expected to benefit if oil price continues to stay healthy — Whiting Petroleum Corporation (WLL - Free Report) and Earthstone Energy, Inc. (ESTE - Free Report) . While Whiting Petroleum sports a Zacks Rank #1 (Strong Buy), Earthstone Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.