In its weekly release, Houston-based oilfield services company Baker Hughes Inc. reported a marginal rise in the U.S. rig count (number of rigs searching for oil and gas in the country).
This can be attributed to an increase in the tally of miscellaneous and oil-directed rigs, partially offset by cutbacks in natural gas rig count. In particular, the oil rig count jumped to a new 25-year high, while natural gas drilling dropped to another 13-year low.
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 1,931 for the week ended August 10, 2012. This was up by 1 from the previous week’s count and represents the second increase in as many weeks.
The current nationwide rig count is more than double than that of the 6-year low of 876 (in the week ended June 12, 2009) but is below the prior-year level of 1,959. 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 offshore drilling inched up 1 to 50, while land operations and inland waters activity remained steady at 1,861 and 20 rigs, respectively.
Natural Gas Rig Count: The natural gas rig count decreased for the fourteenth time in 16 weeks to 495 (a drop of 3 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since July 16, 1999 and is down 47% from its 2011 peak of 936, reached during mid-October.
The current natural gas rig count remains 69% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 896 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 3 to 1,432. 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 1,055. It has recovered strongly from a low of 179 in June 2009, rising by 8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 was up by 1 from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 4 to 543, 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 5 at 1,388. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – increased by 6 from the last week’s level to 1,161.