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Permian Oil Drilling Rig Count Falls for Two Straight Weeks
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Baker Hughes Company (BKR - Free Report) , in its weekly release, stated that the U.S. rig count was higher than the prior week’s reported 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 Rises: 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 Jan 19. The figure is higher than theweek-ago level of 619. The count increased after decreasing for two straight weeks. Despite the increase in the tally, 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, however, lower than the year-ago level of 771.
Onshore rigs in the week that ended on Jan 19, totaled 600, up from the prior week's count of 599. In offshore resources, 20 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Declines: The oil rig count was 497 in the week ended Jan 19, lower than the week-ago figure of 499. 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 613.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 120 is above the week-ago figure of 117. The count of rigs exploring the commodity is, however, below the year-ago week’s level of 156. 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 12 units, which increased from the week-ago count of 10. 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 608 slipped from the prior-week level of 609.
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 304. The number declined for two straight weeks.
Outlook
The West Texas Intermediate crude price is trading above 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 over boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month than in January, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be lower in February 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 Diamondback Energy, Inc. (FANG - 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.
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. It carries a Zacks Rank #3 at present. FANG is likely to continue witnessing increased production volumes. It also has an investment-grade balance sheet.
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Permian Oil Drilling Rig Count Falls for Two Straight Weeks
Baker Hughes Company (BKR - Free Report) , in its weekly release, stated that the U.S. rig count was higher than the prior week’s reported 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 Rises: 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 Jan 19. The figure is higher than theweek-ago level of 619. The count increased after decreasing for two straight weeks. Despite the increase in the tally, 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, however, lower than the year-ago level of 771.
Onshore rigs in the week that ended on Jan 19, totaled 600, up from the prior week's count of 599. In offshore resources, 20 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Declines: The oil rig count was 497 in the week ended Jan 19, lower than the week-ago figure of 499. 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 613.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 120 is above the week-ago figure of 117. The count of rigs exploring the commodity is, however, below the year-ago week’s level of 156. 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 12 units, which increased from the week-ago count of 10. 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 608 slipped from the prior-week level of 609.
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 304. The number declined for two straight weeks.
Outlook
The West Texas Intermediate crude price is trading above 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 over boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month than in January, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be lower in February 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 Diamondback Energy, Inc. (FANG - 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.
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. It carries a Zacks Rank #3 at present. FANG is likely to continue witnessing increased production volumes. It also has an investment-grade balance sheet.