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 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 1,800 for the week ended November 2, 2012. This was down by 26 from the previous week’s rig count and represents the tenth decrease in 12 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 2,026. 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 26 to 1,733, offshore drilling was down by 1 to 51 rigs, while inland waters activity increased by 1 to 16 units.
Natural Gas Rig Count: The natural gas rig count recovered from a 13-year low – increasing for the fifth time in 11 weeks – to 424 (a gain of 8 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down 55% from its 2011 peak of 936, reached during mid-October.
In fact, the current natural gas rig count remains 74% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 907 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 35 to 1,373. Nevertheless, the current tally is way above the previous year’s rig count of 1,112. 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 was up by 1 from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 12 to 500, 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 14 at 1,300. In particular, horizontal rig units – that reached an all-time high of 1,193 in May this year – remained unchanged from the last week’s level at 1,105.