U.S. Gains 19 Drilling Rigs - Analyst Blog

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country), primarily reflecting an increase in the number of land rigs.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG), Diamond Offshore (DO), Noble Corp. (NE), Pride International (PDE), Nabors Industries (NBR), Patterson-UTI Energy (PTEN) and Helmerich & Payne (HP) in gauging the overall business environment of the oil and gas industry.

Weekly Summary

Rigs engaged in exploration and production in the U.S. totaled 1,732, up by 19 from the previous week's count. The current nation-wide rig count has almost doubled from the 2009 low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,317. It rose to a 22-year high in 2008, peaking to 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations climbed by 18 to 1,689, inland waters activity increased by 2 to 17 but offshore drilling fell by 1 this week to 26.

Natural Gas Rig Count

The natural gas rig count increased for the second successive week to 913 (a gain of 7 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs are down approximately 8% from the 18-month high reached during mid-August, 2010, when it hit 992, the highest since February 2009.

The current natural gas rig count remains 43% below its peak of 1,606 in late summer 2008 but has rebounded strongly after bottoming out to a 7-year low of 665 on July 17, 2009. In the year-ago period, there were 861 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 11 to 809, the twenty-second gain in the last 28 weeks. The current tally – the highest in 23 years – is considerably more than the previous year's rig count of 444. It has recovered strongly from a low of 179 in June 2009, more than quadrupling in number.

Miscellaneous Rig Count

The miscellaneous rig count (primarily drilling for geothermal energy), at 10, was up by 1 from the previous week.

Rig Count by Type

The number of vertical drilling rigs improved by 8 to 522, 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) rose by 11 to 1,210.

 
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