In its weekly release, Baker Hughes, a GE company (NYSE:BHGE) reported that rig count in the United States remained flat.
More on the Rig Count
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry.
A change in the Houston-based oilfield services players’ rotary rig count affects demand for energy services like drilling, completion and production provided by companies like Halliburton Company (NYSE:HAL) , Schlumberger Limited (NYSE:SLB) , Diamond Offshore Drilling, Inc (NYSE:DO) and Transocean Ltd. (NYSE:RIG) .
Details
Total U.S. Rig Count In Line: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1075 in the week ended Jan 11, flat with the prior week.
Despite rig count slipping to an all-time low of 404 in May 2016, it has been rising rapidly in U.S. shale resources. The current national rig count is higher than the prior-year quarter’s level of 939.
The number of onshore rigs totaled 1052, up from 1050 in the previous week. However, the tally for offshore activities totaled 21, down from 22 for the week ended Jan 4. Moreover, through the week ended Jan 11, two rigs operated in the inland waters, down from the prior week’s count of 3.
U.S. Removes Four Oil Rigs: Oil rig tally was 873, down from 877 in the week ended Jan 4. This marked a decline for two weeks in a row.
Nevertheless, the current total, far from the peak of 1,609 attained in October 2014, is higher than the tally of 752 a year ago.
Natural Gas Rig Count Increases in the United States: The natural gas rig count of 202 is higher than the count of 198 for the week ended Jan 4.
Moreover, like oil, the count of rigs exploring the commodity is above the prior-year quarter’s 187. Notably, per the recent report, the number of natural gas-directed rigs is 87.4%, below the all-time high of 1,606 in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 65 units, up from the previous week’s tally of 64. However, the horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations also known as shale formations) fell by one unit to 1,010.
Gulf of Mexico (GoM) Rig Count Declines: The GoM rig count is 21 units, of which 17 were oil-directed. The count was lower than the tally of 22 for the week ended Jan 4.
Conclusion
Four onshore rigs were removed from Oklahoma, but each of Pennsylvania and West Virginia, witnessed the addition of two onshore rigs, keeping the weekly rig count flat.
It is to be noted that the weak crude pricing scenario has not made any significant impact on U.S. shale drillers as with the advancement of technologies, well costs have declined drastically.
Since breakeven oil price in the Permian play is lower than $30 a barrel — per Pioneer Natural Resources Company (NYSE:PXD) — and the West Texas Intermediate (WTI) crude is hovering around $50, it will be a wise decision to keep a track of drillers operating in the prolific resource. Two such upstream stocks are Pioneer Natural Resources Company and Concho Resources Inc (NYSE:CXO) . The firms carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Original post
Zacks Investment Research