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Permian Oil Drilling Rig Count Rises in 6 of Prior 10 Weeks

In its weekly release, Baker Hughes Company BKR reported that the U.S. rig count was higher than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.

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. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.

Details

Total U.S. Rig Count Increases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 782 for the week ended Nov 18. The figure is higher thanthe prior week’s count of 779. Thus, the tally increased in five of the prior six weeks. The current national rig count is higher than the year-ago level of 563.

The onshore rigs in the week ended Nov 18 totaled 762, higher than the prior-week count of 758. In offshore resources, 17 rigs were operating, in line with the prior-week count.

U.S. Oil Rig Count Rises: Oil rig count was 623 for the week ended Nov 18, higher than the prior week’s figure of 622. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is up from the year-ago figure of 461.

U.S. Natural Gas Rig Count Increases: Natural gas rig count of 157 was higher than the prior-week figure of 155. The count of rigs exploring the commodity is higher than the prior-year week’s tally of 102. Per the latest report, the number of natural gas-directed rigs is 90.2% lower than the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 23 units, higher than the prior-week count of 22. 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 759 is higher than the prior-week level of 757.

Gulf of Mexico (GoM) Rig Count Flat: GoM rig count was 16 units, all oil-directed. The count was flat with the prior-week number.

Rig Count in the Most Prolific Basin

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 345, lower than the prior week's count of 347. However, the tally increased in six of the prior 10 weeks.

Outlook

The West Texas Intermediate crude price is trading at more than the $80-per-barrel mark, which is still extremely favorable for exploration and production activities. Solid oil prices will likely pave the way for further rig additions despite a slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output.

Investors may keep a close eye on energy stocks like EOG Resources EOG and Continental Resources, Inc. CLR, as these companies are expected to benefit from the current healthy oil price scenario.

EOG Resources, a leading oil and natural gas exploration and production company currently carrying a Zacks Rank #3 (Hold), is well-placed to capitalize on the promising business scenario. It has an estimated 11,500 net undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EOG Resources is strongly committed to returning capital to shareholders. Since it transitioned to premium drilling, the company has returned $10.4 billion in cash to stockholders. With the employment of premium drilling, EOG will be able to reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. Its oil inventories are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources is likely to witness earnings growth of roughly 141% in 2022. The Zacks Rank #3 firm has gained 50% in the past year, outpacing the 35.7% rise of the composite stocks belonging to the industry.

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