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Permian Oil Drilling Rig Count Falls for 3 Straight Weeks
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In its weekly release, Baker Hughes Company (BKR - Free Report) stated that the U.S. rig count was lower than the prior week’s figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
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. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Falls: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 620 in the week ended Dec 21. The figure is lower than theweek-ago count of 623. The figure decreased for two straight weeks. Many analysts believe that there has been a slowdown in drilling activities since shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is also lower than the year-ago level of 779.
Onshore rigs in the week that ended on Dec 21 totaled 601, lower than the prior week's count of 604. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Declines: The oil rig count was 498 in the week ended Dec 21, lower than the week-ago figure of 501. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is also down from the year-ago figure of 622.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 120 is higher than the week-ago figure of 119. The count of rigs exploring the commodity is, however, below the year-ago week’s 155. Per the latest report, the number of natural gas-directed rigs is almost 93% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 11 units, lower than the week-ago count of 14. 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 609 is in line with the prior-week level.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig count of 303, lower than a week-ago figure of 306. The number decreased for three straight weeks.
Outlook
The West Texas Intermediate crude price is trading at more than the $70-per-barrel mark. Although the commodity pricing scenario is favorable for exploration and production operations, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month than in December, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be slightly lower in January than this month, per the U.S. Energy Information Administration. This further confirms a slowdown in drilling activities.
In light of short-term uncertainties, investors seeking medium to long-term gains may keep an eye on energy stocks such as EOG Resources (EOG - Free Report) and Matador Resources Company (MTDR - Free Report) .
EOG Resources, currently carrying a Zacks Rank #3 (Hold), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since transitioning to premium drilling, the company has returned a handsome amount of cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
Matador Resources has a strong presence in the oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Promising oil prices are likely to aid it in increasing production volumes. Matador acquired Advance Energy Partners Holdings, LLC, which comprises several oil and natural gas-producing properties and undeveloped acreage. Zacks #3 Ranked MTDR expects the buyout to be accretive to important valuation and financial metrics.
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Permian Oil Drilling Rig Count Falls for 3 Straight Weeks
In its weekly release, Baker Hughes Company (BKR - Free Report) stated that the U.S. rig count was lower than the prior week’s figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
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. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Falls: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 620 in the week ended Dec 21. The figure is lower than theweek-ago count of 623. The figure decreased for two straight weeks. Many analysts believe that there has been a slowdown in drilling activities since shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is also lower than the year-ago level of 779.
Onshore rigs in the week that ended on Dec 21 totaled 601, lower than the prior week's count of 604. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Declines: The oil rig count was 498 in the week ended Dec 21, lower than the week-ago figure of 501. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is also down from the year-ago figure of 622.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 120 is higher than the week-ago figure of 119. The count of rigs exploring the commodity is, however, below the year-ago week’s 155. Per the latest report, the number of natural gas-directed rigs is almost 93% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 11 units, lower than the week-ago count of 14. 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 609 is in line with the prior-week level.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig count of 303, lower than a week-ago figure of 306. The number decreased for three straight weeks.
Outlook
The West Texas Intermediate crude price is trading at more than the $70-per-barrel mark. Although the commodity pricing scenario is favorable for exploration and production operations, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month than in December, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be slightly lower in January than this month, per the U.S. Energy Information Administration. This further confirms a slowdown in drilling activities.
In light of short-term uncertainties, investors seeking medium to long-term gains may keep an eye on energy stocks such as EOG Resources (EOG - Free Report) and Matador Resources Company (MTDR - Free Report) .
EOG Resources, currently carrying a Zacks Rank #3 (Hold), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since transitioning to premium drilling, the company has returned a handsome amount of cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
Matador Resources has a strong presence in the oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Promising oil prices are likely to aid it in increasing production volumes. Matador acquired Advance Energy Partners Holdings, LLC, which comprises several oil and natural gas-producing properties and undeveloped acreage. Zacks #3 Ranked MTDR expects the buyout to be accretive to important valuation and financial metrics.