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 fall 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 1,837 for the week ended October 5, 2012. This was down by 11 from the previous week’s rig count and represents the seventh decrease in 8 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 2,012. 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 8 to 1,773, offshore drilling was down by 2 to 48 rigs, while inland waters activity decreased by 1 to 16 units.
Natural Gas Rig Count: The natural gas rig count – which recently slumped to a 13-year low of 435 – increased for the third time in 7 weeks to 437 (a gain of 2 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down 53% from its 2011 peak of 936, reached during mid-October.
In fact, 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 935 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 12 to 1,398. Nevertheless, the current tally is way above the previous year’s rig count of 1,070. 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 2 was down by 1 from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 3 to 511, 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 8 at 1,326. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – decreased by 10 from the last week’s level to 1,132.