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US Oil & Gas Rig Tally Falls After Rising for 4 Straight Weeks

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In its weekly release, Baker Hughes Company (BKR - Free Report) reported a decrease 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 the demand for energy services like drilling completion and production, provided by the likes of Halliburton Company (HAL - Free Report) and Schlumberger Limited (SLB - Free Report) .

Details

Total U.S. Rig Count Declines: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 497 for the week through Sep 3, lower than 508 in the prior week. Thus, the tally declined after increasing for four consecutive weeks, as the United States was hit by Hurricane Ida. The current national rig count is, however, higher than the year-ago level of 256.

The number of onshore rigs for the week ended Sep 3 totaled 495, higher than the prior-week count of 490. In offshore resources, two rigs were operating, lower than the prior-week count of 15.

U.S. Oil Rig Count Decreases: Oil rig count was 394 for the week ended Sep 3, lower than the prior-week count of 410. Since June 2020, this has been the biggest decline. 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 181.

Natural Gas Rig Count Increases in the United States: Natural gas rig count of 102 was higher than the prior-week count of 97. The count of rigs exploring the commodity was higher than the prior-year week’s 72. Per the latest report, the number of natural gas-directed rigs is almost 94% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 23 units, higher than the prior-week count of 21. 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 474 compared unfavorably with the prior-week level of 487.

Gulf of Mexico (GoM) Rig Count Plummets: No rigs were operating in the GoM. In the prior week, the tally for rigs operating in the region was 14.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 249, higher than the prior-week count of 248. The tally for oil drilling rigs in the basin increased for four straight weeks. In Haynesville shale play, the count of natural gas drilling rigs was 47, higher than 44 in the week through Aug 27.

Outlook

The price of West Texas Intermediate crude is trading near the $70-per-barrel mark and is 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 despite slowdown of drilling activities, 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 the 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.