Natural Gas Propels U.S. Rig Count - 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 land rig count for natural gas drilling.

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 1,687 – up by 10 from the previous week's rig count and representing the highest level achieved this year. The current nation-wide rig count is 93% higher than the 2009 low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,137. 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 10 to 1,647, while inland waters and offshore activity remained steady at 20 each.

Natural Gas Rig Count

The natural gas rig count increased for the first time in four weeks to 953 rigs (a gain of 17 from the previous week). The current number of gas-directed rigs is just 39 short of the 18-month high reached during mid-August, rebounding strongly after bottoming out to a 7-year low of 665 on July 17, 2009. Still, the rig count remains 41% below its peak of 1,606 in late summer 2008. In the year-ago period, there were 748 active natural gas rigs.

Oil Rig Count

The oil rig count was down by 7 rigs to 724, the first decline since September. Despite this week-over-week fall, the current tally is considerably higher than the previous year's rig count of 379. It has recovered nicely 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 remained unchanged from the previous week.

Rig Count by Type

The number of vertical drilling rigs was down 9 to 523, 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 19 to 1,164.

 
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