In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI - Free Report) reported a dip in the U.S. rig count (number of rigs searching for oil and gas in the country).
This can be attributed to cutbacks in the tally of gas-directed rigs, partially offset by increase in oil rig count. In particular, the natural gas rig count dropped for the eighth time in 9 weeks to touch another near 13-year low., while oil drilling jumped to a new 25-year high.
The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG - Free Report) , Diamond Offshore (DO - Free Report) , Noble Corp. (NE - Free Report) , Nabors Industries (NBR - Free Report) , Patterson-UTI Energy (PTEN - Free Report) , Helmerich & Payne (HP - Free Report) , etc. in gauging the overall business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,966 for the week ended June 22, 2012. This was down by 5 from the previous week’s count and represents the fourth decrease in the past 5 weeks.
Despite this, the current nationwide rig count is more than double that of the 6-year low of 876 (in the week ended June 12, 2009) and comfortably exceeds the prior-year level of 1,882. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.
Rigs engaged in land operations inched up by 1 to 1,900, while inland waters activity and offshore drilling were down by 3 each at 18 and 48 units, respectively
Natural Gas Rig Count: The natural gas rig count decreased for the eighth time in 9 weeks to 541 (a drop of 21 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since August 20, 1999 and is down more than 42% from its 2011 peak of 936, reached during mid-October.
The current natural gas rig count remains 66% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 873 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 16 to 1,421. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year’s rig count of 1,003. It has recovered strongly from a low of 179 in June 2009, rising by nearly 8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 remained unchanged from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 8 to 568, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was up by 3 at 1,398. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – increased by 3 from last week’s level to 1,165.