(BHI) U.S. Oil Drilling Pushes Rig Count 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.

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 1,886 for the week ended July 1, 2011. This is up by 4 from the previous week’s rig count and represents the highest level since November 21, 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 1,557. 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 4 to 1,837, while inland waters activity and offshore drilling remained steady at 16 and 33, respectively.

Natural Gas Rig Count

The natural gas rig count, which slid to a 16-month low of 866 in May, increased for the second time in as many weeks to 874 (a gain of 1 rig from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down nearly 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 960 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 3 to 1,006. The current tally – the highest in 23 years – is considerably more than the previous year’s rig count of 587. It has recovered strongly from a low of 179 in June 2009, rising more than 5.5 times.

Miscellaneous Rig Count

The miscellaneous rig count (primarily drilling for geothermal energy), at 6, remained steady from the previous week.

Rig Count by Type

The number of vertical drilling rigs rose by 5 to 570, 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 down by 1 at 1,316. In particular, horizontal rig units came off by 8 from last week’s all-time high of 1,081.

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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