U.S. Drilling Rig Count Down by 2 - Analyst Blog
03 Março 2014 - 6:00PM
Zacks
In its weekly release,
Houston-based oilfield services company Baker Hughes
Inc. (BHI) reported a fall in the U.S. rig count (number
of rigs searching for oil and gas in the country). This downside
can be traced back to a decrease in the tally of gas-directed
rigs.
The Baker Hughes’ data, issued since 1944, acts as an important
yardstick for energy service providers in gauging the overall
business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the
U.S. totaled 1,769 for the week ended Feb 28, 2014. This was down
by 2 from the previous week’s rig count.
The current nationwide rig count is more than double the lowest
level reached in recent years (876 in the week ended Jun 12, 2009)
and is above the prior-year level of 1,757. It rose to a 22-year
high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep
12.
Rigs engaged in land operations remained flat at 1,696, offshore
drilling lowered by 2 to 55, while inland waters activity also was
flat at 18 units, respectively.
Natural Gas Rig Count: The natural gas rig count – which slumped
last year to its lowest point since Jun 1995 – decreased to 335 (7
rigs less than the previous week). Also owing to the weekly fall,
the number of gas-directed rigs is down almost 59% from its peak of
811, achieved in 2012.
In fact, the current natural gas rig count is 79% below its
all-time high of 1,606 reached in late summer 2008. In the
comparable year-ago period, there were 420 active natural gas
rigs.
Oil Rig Count: The oil rig count – that rocketed to a 25-year high
of 1,432 in Aug 2012 – rose by 5 to 1,430. It has recovered
strongly from a low of 179 in Jun 2009, rising almost 8 times. The
current tally is also above the previous year’s rig count of
1,333.
Miscellaneous Rig Count: The miscellaneous rig count (primarily
drilling for geothermal energy) at 4 was flat with the previous
week.
Rig Count by Type: The number of vertical drilling rigs fell by 1
to 391, while the horizontal/directional rig count (encompassing
new drilling technology that has the ability to drill and extract
gas from dense rock formations, also known as shale formations)
decreased by 1 to 1,378.
Gulf of Mexico (GoM): The GoM rig count fell by 2 from its week-ago
level to 53.
Conclusion
A Key Barometer of Drilling Activity: An increase or decrease in
the Baker Hughes rotary rig count heavily weighs on the demand for
energy services – drilling, completion, production etc. – provided
by companies that include large-caps like Halliburton
Co. (HAL) and Schlumberger Ltd. (SLB).
However, our preferred pick in this group is Emerge Energy
Services LP (EMES). The Southlake, Texas-based firm –
carrying a Zacks Rank #2 (Buy) – has a solid secular growth story
with the potential to rise from the current level.
BAKER-HUGHES (BHI): Free Stock Analysis Report
EMERGE ENRG SVC (EMES): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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