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Permian Adds Oil Drilling Rigs After 3 Weeks of Decline

Zacks Equity Research

In its weekly release, Baker Hughes, a GE company BHGE reported flat rig count in the United States.

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 this Houston-based oilfield services player’s rotary rig count affects demand for energy services like drilling, completion and production provided by the likes of Halliburton Company HAL, Schlumberger Limited SLB, Diamond Offshore Drilling, Inc DO and Transocean Ltd. RIG.

Details

Total US Rig Count Flat: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 967 in the week ended Jun 28, in line with the prior week’s figure. The current national rig count is, however, lower than the prior year’s 1047.

The number of onshore rigs through the week ended Jun 28 totaled 938, lower than the previous week’s count of 939. Moreover, three rigs operated in inland waters, lower than the prior week’s count of four. However, the tally of rigs operated in the offshore plays through the week ended Jun 28 was 26, higher than the prior week’s count of 24.

US Adds Four Oil Rigs: Oil rig tally was 793, up from 789 in the week ended Jun 21. This marks an increase in count for two successive weeks. However, the current total, far from the peak of 1,609 attained in October 2014, is lower than 858 a year ago.

Natural Gas Rig Count Decreases in US: The natural gas rig count of 173 is lower than 177 for the week ended Jun 21.

Moreover, the count of rigs exploring the commodity is lower than the prior-year weeks’ tally of 187. Per the latest report, the number of natural gas-directed rigs is 89.2% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 59 units against the previous week’s 53. 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) of 908 was below the prior-week level of 914.

Gulf of Mexico (GoM) Rig Count Increases: The GoM rig count is 26 units, of which 24 were oil-directed. The count was higher than the prior-week tally of 24.

Permian Basin Count

Two oil drilling rigs were added to the Permian Basin. Notably, Permian — the most prolific basin in the United States, which employs roughly half of the nation’s total rigs — has seen a rise in oil rigs through the week ended Jun 28, after the tally declined for the previous three consecutive weeks. The considerable rise in oil price over the past month has likely prompted crude drillers to add rigs despite plans of conservative investments.   

Overall, it would be wise for investors to consider Permian drillers, as they have become more efficient with the deployment of lesser rigs to produce more of crude volumes. Two Permian drillers that investors may consider are Devon Energy Corporation DVN and Pioneer Natural Resources Company PXD. Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Halliburton Company (HAL) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Baker Hughes, a GE company (BHGE) : Free Stock Analysis Report
 
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