In its weekly release, Baker Hughes, a GE company BHGE reports a decrease in the U.S. rig count.
More on the Rig Count
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry.
A change in the Houston-based oilfield services players’ rotary rig count impacts demand for energy services like drilling, completion and production provided by the likes of Halliburton Company HAL, Schlumberger Ltd. SLB, Diamond Offshore Drilling, Inc. DO and Transocean Ltd. RIG.
Total U.S. Rig Count Decreases: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1079 in the week ended Nov 21, lower than 1082 in the prior week. This marks a fall in rig count, after the tally increased for two weeks in a row.
Despite the rig count slipping to an all-time low of 404 in May 2016, it has been rising rapidly in U.S. shale resources. The current national rig count is considerably higher than the prior-year level of 923.
For the week under review, the fall in rig count can be attributed to decreased onshore operations. The number of onshore rigs totaled 1052, down from 1058 in the previous week. However, offshore rig count increased to 25 from 22. The tally for inland water rig was in line with the count for the week ended Nov 16. Notably, two rigs operated in the inland waters last week.
U.S. Removes Three Oil Rigs: Oil rig tally was 885, down from 888 in the week ended Nov 16. Notably, the tally increased in five of the last 10 weeks.
However, the current total, though far from the peak of 1,609 attained in October 2014, is significantly higher than last year’s 747.
Natural Gas Rig Count Flat in the United States: The natural gas rig count of 194 was in line with the count for week ended Nov 16.
Importantly, like oil, the count of rigs exploring the commodity is above the prior-year number of 176. However, per the recent report, the number of natural gas-directed rigs is almost 88%, below the all-time high of 1,606 in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 77 units, up from the previous week’s 72. However, the horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations also known as shale formations) decreased by eight units to 1002.
Gulf of Mexico (GoM) Rig Count Rises: The GoM rig count is 25 units, of which 18 were oil directed. The count is higher than the tally of 22 for the week ended Nov 16.
Weak crude pricing scenario led major basins in the United States to witness withdrawal of rigs. Cana Woodford basin saw the removal of three oil rigs, while one oil drilling rig was removed from each of Eagle Ford and Williston basins.
Although the U.S. crude benchmark plunged to its lowest settlement since mid-October 2017, the possibility that Saudi Arabia will consider curbing supply in the OPEC meeting on Dec 6 could give some respite to the commodity price. The positive development is expected to back oil drillers to resume adding rigs, reflecting favorable business scenario for explorers and producers.
Hence, investor-friendly stocks like Energen Corp. EGN and Antero Resources Corp. AR are in focus. While Energen sports a Zacks Rank #1 (Strong Buy), Antero carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Energen surpassed the Zacks Consensus Estimate in each of the last four quarters, average positive earnings surprise being 18.6%.
We expect Antero’s earnings to skyrocket 230.3% year over year in 2018.
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Energen Corporation (EGN) : Free Stock Analysis Report
Schlumberger Limited (SLB) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
Transocean Ltd. (RIG) : Free Stock Analysis Report
Antero Resources Corporation (AR) : Free Stock Analysis Report
Baker Hughes, a GE company (BHGE) : Free Stock Analysis Report
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