In its weekly release, Houston-based oilfield services company Baker Hughes Inc. 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 oil-directed rigs, partially offset by increase in natural gas rig count.
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 1,859 for the week ended September 21, 2012. This was down by 5 from the previous week’s count and represents the fifth decrease in 6 weeks.
Despite this, 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) though it is below the prior-year level of 1,991. 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 descended by 7 to 1,787, offshore drilling was up by 2 to 53 rigs, while inland waters activity remained steady at 19 units.
Natural Gas Rig Count: The natural gas rig count – which recently slumped to a 13-year low of 448 – increased for the first time in 4 weeks to 454 (a gain of 6 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down 52% from its 2011 peak of 936, reached during mid-October.
In fact, the current natural gas rig count remains 72% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 912 active natural gas rigs.
Oil Rig Count: The oil rig count – which was at a 25-year high of 1,432 in August – was down by 11 to 1,402. Nevertheless, the current tally is way above the previous year’s rig count of 1,071. It has recovered strongly from a low of 179 in June 2009, rising by almost 8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 3 remained unchanged from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 16 to 508, 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 11 at 1,351. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – increased by 16 from the last week’s level to 1,149.