Why you should monitor US rigs topping past two years’ counts (Part 1 of 9)
U.S. total rig count adds five last week
The U.S. total drilling rig count increased by five rigs—from 1,908 to 1,913—during the week ending August 15. Baker Hughes publishes the rig counts every week. This marked the highest number of rigs since August 17, 2012.
The number of oil rigs increased by one, while the number of natural gas rigs increased by five. Rigs that were categorized as “miscellaneous” decreased by one during the last week.
The increase in rig count was led by increases in horizontal rig drilling. See Part 3 of this series to learn more about vertical versus horizontal rigs.
Year-to-date (or YTD), the total U.S. rig count has increased by 162—or 9%. Oil rigs have increased by 211—or 15%. Natural gas rigs have decreased by 51—or ~14%.
Rig count trends show how much inclination companies have to spend on drilling
Rig counts represent how many rigs are actively drilling for hydrocarbons—oil and gas. Baker Hughes noted that rig count trends are “governed by oil company exploration and development spending, which is influenced by the current and expected price of oil and natural gas.”
Rig counts can represent how confident oil and gas producers, like occidental Petroleum (OXY) and EOG Resources (EOG), feel about the drilling environment.
Since rig counts show one measure of oil and gas drilling activity, the figure can also be a useful indicator to gauge the activity levels of oilfield service companies such as Halliburton (HAL) and Baker Hughes (BHI). These companies are part of the Energy Select Sector SPDR (XLE).
Rising rig counts are a good sign for oil and gas producers as well as oil field service providers.
The next part of the series will discuss more about the various types of rig counts, what they mean, and why they should matter to investors.
Browse this series on Market Realist:
- Part 2 - Onshore rig counts increased to their highest level in 2 years
- Part 3 - Why horizontal rig counts show no signs of pulling over
- Part 4 - Why the Permian has been driving vertical rigs to reach records
- Sectors & Industries
- Baker Hughes