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U.S. Rig Count Falls for the Second Consecutive Month

Zacks Equity Research
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Baker Hughes, a GE company BHGE recently announced the rig count for February 2019. In the United States, the total number of rigs fell from the January 2019 figure due to a lower number of onshore and offshore rigs. Importantly, this is the second consecutive decline in the U.S. monthly rig count.

More on the Rig Count

Baker Hughes’ data, issued at the end of every week since 1944, facilitates energy service providers gauge the overall business environment of the oil and gas industry.

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

Analysis of the Data

North America Rig Count

In February, rig count in North America (the United States and Canada) totaled 1,279. The figure was higher than 1,241 in January but down from 1,292 a year ago.   

U.S. rig: Total number of rigs in the United States was 1,049. The figure is lower than 1,065 rigs last January but higher than 969 a year ago.   

Of the total count, land rig count totaled 1,029. This is lower than 1,044 rigs in the prior month but higher than 952 rigs in February 2018.  

The number of U.S. offshore rigs in February 2019 was 20, down from 21 in January 2019 but up from 17 rigs in February 2018.

Canada rig: In Canada, the total rig count of 230 was higher than 176 in January 2019 but lower than 323 in February 2018.

International Rig Count

Total international rig count (offshore and land) in the month of February was 1,027. The tally increased by 3 from the January count. Moreover, the figure is higher than 979 recorded in February 2018.

Offshore rig: The offshore rig count in February 2019 was 250, higher than 242 in January as well as 194 a year ago.  

Land Rig: The land rig count was 777 compared with 782 in January 2019 and 785 in February 2018.

Conclusion

Schlumberger during its quarterly results announcement revealed that explorers and producers are getting more conservative about investing since there has been a volatility in oil prices. Conservative investments in upstream activities might affect demand for rigs. Hence, drillers may continue to lower rig count in the coming months in the United States. In fact, it is quite obvious that even a more than 20% improvement in West Texas Intermediate (WTI) oil price since the beginning of 2019 has not restored the confidence of upstream energy players in prolific U.S. resources.

Despite the pessimism, there are a couple of upstream energy players like Concho Resources Inc CXO and Apache Corporation APA that investors could keep an eye on. 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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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
 
Apache Corporation (APA) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
Baker Hughes, a GE company (BHGE) : Free Stock Analysis Report
 
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