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Cana Woodford Basin Witnesses Removal of 3 Oil Drilling Rigs

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In its weekly release, Baker Hughes, a GE company (BHGE - Free Report) reported a drop in weekly rig count in the United States.    

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 services player’s rotary rig count affects demand for energy services like drilling, completion and production provided by companies like Halliburton Company (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) , Diamond Offshore Drilling, Inc (DO - Free Report) and Transocean Ltd. (RIG - Free Report) . 


Total U.S. Rig Count Decreases: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1047 in the week ended Feb 22, down from the prior week tally of 1051. This marked a decline after the tally increased for two weeks in a row.

Despite the rig count slipping to an all-time low of 404 in May 2016, it has been rising rapidly in U.S. shale resources. The current national rig count is higher than the prior-year quarter’s 978.  

The number of onshore rigs totaled 1026, down from 1028 in the previous week. Moreover, the tally for offshore activities totaled 19, down from 21 in the week through Feb 15. Two rigs operated in the inland waters, in line with the prior week.

U.S. Removes Four Oil Rigs: Oil rig tally was 853, down from 857 in the week ended Feb 15. With this, the count for oil rigs declined after the tally increased for two consecutive weeks.

However, the current total, far from the peak of 1,609 attained in October 2014, is higher than 799 a year ago. 

Natural Gas Rig Count Flat in the United States: The natural gas rig count of 194 is in line with the count for the week ended Feb 15.

However, like oil, the count of rigs exploring the commodity is above the prior-year quarter’s 179. Per the latest report, the number of natural gas-directed rigs is almost 88%, below the all-time high of 1,606 in 2008.  

Rig Count by Type: The number of vertical drilling rigs totaled 63 units, down from the previous week’s tally of 66. Moreover, 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) decreased by an unit to 984.

Gulf of Mexico (GoM) Rig Count Decreases: The GoM rig count is 19 units, of which 15 were oil-directed. The count was lower than the prior week’s 21.


Three oil drilling rigs were removed from the Cana Woodford basin, resulting in the weekly rig count decline.

It is to be noted that Schlumberger during its quarterly results announcement revealed that explorers and producers are getting more conservative about investing owing to volatile oil prices. Conservative investments in upstream activities might affect demand for rigs. Hence, drillers may continue to lower oil rig count in the coming weeks.

Despite the pessimism, there are a couple of upstream energy players like Concho Resources Inc (CXO - Free Report) and Apache Corporation (APA - Free Report) that investors could keep an eye on. Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

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