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Permian Witnesses Addition of Oil Rigs in 8 of Past 10 Weeks

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In its weekly release, Baker Hughes Company BKR reported an increase in the U.S. rig count.

More on the Rig Count

Baker Hughes’ data, which is 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 service 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 along with Transocean Ltd. RIG.

Details

Total US Rig Count Increases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 439 for the week through Apr 16compared with the prior-week figure of 432. The latest tally marked the highest count since April 2020. Moreover, the count has increased for five consecutive weeks. However, the current national rig count is below the year-ago level of 529.

The number of onshore rigs for the week ended Apr 16 totaled 426, higher than the prior count of 421. In offshore resources, 12 rigs were operating versus the prior-week count of 11.

US Adds 7 Oil Rigs: Oil rig count was 344 for the week through Apr 16 compared with 337 in the week ended Apr 9. The latest tally marked the highest count since April 2020. Investors should also note that the current tally of oil rigs — far from the peak of 1,609 attained in October 2014 — is, however, below the year-ago figure of 438.

Natural Gas Rig Count Increases in US: Natural gas rig count of 94 increased from the prior-week count of 93. Notably, the count of rigs exploring the commodity was higher than the prior-year week’s 89. Per the latest report, the number of natural gas-directed rigs is almost 94.2% below the all-time high of 1,606 recorded in 2008. Importantly, the latest count marked the highest tally since April 2020.

Rig Count by Type: The number of vertical drilling rigs totaled 21 units versus the prior-week count of 20. Moreover, 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 418 compared favorably with the prior-week level of 412.

Gulf of Mexico (GoM) Rig Count Increases: GoM rig count was 12 units, of which all were oil-directed. The count was higher than the prior-week tally of 11.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 226 versus the prior-week count of 223. Thus, the tally for oil drilling rigs in the basin increased in eight of the past 10 weeks. In the Granite Wash basin, the count for oil drilling rigs was three versus one in the prior week.

Outlook

The price of West Texas Intermediate crude, trading at more than $62 per barrel mark, has improved drastically from the pandemic low hit last April, when oil was in the negative territory. With coronavirus vaccines being rolling out at a massive scale, the demand for fuel will possibly improve further. This will likely pave the way for further crude price recovery, thereby encouraging oil and gas drillers to add rigs to shale plays.

Meanwhile, investors may keep an eye on two energy stocks that are expected to benefit if the oil price continues to remain healthy — EOG Resources, Inc. EOG and Diamondback Energy Inc. FANG. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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