In its weekly release, Baker Hughes Company (BKR Quick QuoteBKR - Free Report) stated that the U.S. rig count was in line with 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 Flat: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 600 in the week ended May 31, in line with theweek-ago count. The current national rig count, however, declined from the year-ago level of 696, reflecting the fact that there has been a slowdown in drilling activities. Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.

Onshore rigs in the week that ended on May 31 totaled 578, lower than the prior week's count of 579. In offshore resources, 22 rigs were operating, which, however, increased from the week-ago count of 21.

U.S. Oil Rig Count Declines: The oil rig count was 496 in the week ended May 31, lower than the week-ago figure of 497. 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 555.

U.S. Natural Gas Rig Count Rises: The natural gas rig count of 100 was higher than the week-ago figure of 99. The count of rigs exploring the commodity was, however, below the year-ago week’s tally of 137. Per the latest report, the number of natural gas-directed rigs is almost 94% lower than the all-time high of 1,606 recorded in 2008. 

Rig Count by Type: The number of vertical drilling rigs totaled 20 units, in line with the week-ago count. 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 580 was flat compared 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 and gas rig count of 310, which was lower than the week-ago figure of 312. The count is also below the prior-year level of 348.

Outlook

OPEC+ is aiming to phase out voluntary cuts in oil production, hurting oil prices. However, the West Texas Intermediate crude price is trading higher than the $70-per-barrel mark, highly favorable for exploration and production operations. Although the commodity pricing scenario is handsome, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.

Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like Diamondback Energy, Inc. (FANG Quick QuoteFANG - Free Report) and Matador Resources Company (MTDR Quick QuoteMTDR - Free Report) .

Diamondback Energy, a leading pure-play Permian operator, reported ongoing enhancements in the average productivity per well in the Midland Basin. The exploration and production company expects to maintain growth in production volumes, benefiting from favorable commodity pricing conditions. FANG, carrying a Zacks Rank #3 (Hold), also has an investment-grade balance sheet. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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. The Zacks #3 Ranked Matador is expecting oil production growth of 23% this year.