U.S. Rig Count Slips - Analyst Blog

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), primarily reflecting a decrease in the land rig count.

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 1,709 for the week ended December 17, 2010. This is down by 14 rigs from the previous week's rig count and represents the first decline in 4 weeks. Despite this, the current nation-wide rig count is 95% higher than the 2009 low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,193. 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 descended by 13 rigs to 1,670, inland waters decreased by 1 rig to 16, while offshore drilling activity remained steady at 23 rigs.

Natural Gas Rig Count

The natural gas rig count decreased for the sixth time in ten weeks to 941 rigs (a loss of 7 from the previous week). Despite the weekly decline, the number of gas-directed rigs are just 51 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 773 active natural gas rigs.

Oil Rig Count

The oil rig count was down by 7 rigs to 756, the first decline in 3 weeks. Despite this week-over-week fall, the current tally is considerably higher than the previous year's rig count of 409. It has recovered  gracefully 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 12 remained unchanged from the previous week.

Rig Count by Type

The number of vertical drilling rigs was up by 3 to 535, 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) fell by 17 to 1,174.

 
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