(BHI) U.S. Oil Drilling Rig Count Goes Up

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). This can be primarily attributed to an increase in the tally of oil rigs, somewhat offset by a fall in the natural gas and miscellaneous rig counts.

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), 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 1,860 for the week ended June 17, 2011. This is up by 5 from the previous week’s rig count and represents the highest level since November 26, 2008.

The current nationwide rig count is more than double that of the 6-year low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,539. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations climbed by 3 to 1,808, offshore drilling increased by 2 to 35, while inland waters activity remained steady at 17 rigs.

Natural Gas Rig Count

The natural gas rig count decreased for the second time in as many weeks to 870 (a drop of 9 rigs from the previous week). As per the most recent report, the number of gas-directed rigs – which slid to a 16-month low of 866 last month – is down more than 12% from its 2010 peak of 992, reached during mid-August.

The current natural gas rig count remains 46% below its all-time high of 1,606 reached way back 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 953 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 15 to 984. The current tally – the highest in 23 years – is considerably more than the previous year’s rig count of 574. It has recovered strongly from a low of 179 in June 2009, rising more than 5 times.

Miscellaneous Rig Count

The miscellaneous rig count (primarily drilling for geothermal energy), at 6, was down by 1 from the previous week.

Rig Count by Type

The number of vertical drilling rigs fell by 1 to 558, 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) was up by 6 at 1,302. In particular, horizontal rig units came off by 4 from last week’s all-time high of 1,065.

BAKER-HUGHES (BHI): Free Stock Analysis Report

DIAMOND OFFSHOR (DO): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

NABORS IND (NBR): Free Stock Analysis Report

NOBLE CORP (NE): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

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