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US Oil & Gas Rig Tally Increases in 5 of the Past 6 Weeks

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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) and Schlumberger Limited (SLB - Free Report) .

Details

Total U.S. Rig Count Increases: 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 Sep 10, higher than 497 in the prior week. In the past six weeks, the tally has increased five times. The tally has started to increase since offshore oil rigs in the Gulf of Mexico are returning to service after the United States was hit by Hurricane Ida. The current national rig count is also higher than the year-ago level of 254.

The number of onshore rigs for the week ended Sep 10 totaled 497, higher than the prior-week count of 495. In offshore resources, six rigs were operating, higher than the prior-week count of two.

U.S. Oil Rig Count Increases: Oil rig count was 401 for the week ended Sep 10, higher than the prior-week count of 394. 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 180.

Natural Gas Rig Count Drops in the United States: Natural gas rig count of 101 was lower than the prior-week count of 102. The count of rigs exploring the commodity was, however, higher than the prior-year week’s 71. 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 26 units, higher than the prior-week count of 23. 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 477 compared favorably with the prior-week level of 474.

Gulf of Mexico (GoM) Rig Count Surges: The number of rigs operating in GoM was four. In the prior week, no rigs were operating in the region.

Rig Count in Prolific Basin

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 253, higher than the prior-week count of 249. The tally for oil drilling rigs in the basin increased for five straight weeks.

Outlook

The price of West Texas Intermediate crude has touched the $70-per-barrel mark again 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 a slowdown in 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.