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 natural gas-directed rigs, partially offset by increase in oil 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 1,848 for the week ended September 28, 2012. This was down by 11 from the previous week’s count and represents the sixth decrease in 7 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 1,990. 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 6 to 1,781, offshore drilling was down by 3 to 50 rigs, while inland waters activity decreased by 2 to 17 units.
Natural Gas Rig Count: The natural gas rig count decreased for the nineteenth time in 23 weeks to 435 (a drop of 19 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since June 11, 1999 and is down 54% from its 2011 peak of 936, reached during mid-October.
The current natural gas rig count remains 73% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 923 active natural gas rigs.
Oil Rig Count: The oil rig count – which was at a 25-year high of 1,432 in August – was up by 8 to 1,410. The current tally is way above the previous year’s rig count of 1,060. 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 rose by 6 to 514, 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 down by 17 at 1,334. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – decreased by 7 from the last week’s level to 1,142.