Permian Adds 8 Oil Rigs, Marcellus Gas Rig Count Rises By 3

In its weekly release, Baker Hughes, a GE company (NYSE:BHGE) reported an increase in weekly rig count in the United States.

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 player’s rotary rig count affects demand for energy services like drilling, completion and production provided by the likes of Halliburton Company (NYSE:HAL) , Schlumberger Limited (NYSE:SLB) , Diamond Offshore Drilling, Inc (NYSE:DO) and Transocean Ltd. (NYSE:RIG) .

Details

Total US Rig Count Increases: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 1025 in the week ended Apr 5, up from the prior-week tally of 1006. With this, the tally increased for the first time after falling for six successive weeks.

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’s 1003.

The number of onshore rigs, through the week ended Apr 5, totaled 1000, up from 981 in the previous week. Moreover, three rigs operated in the inland waters, up from the prior week’s tally of two. However, the tally for offshore activities totaled 22, down from 23 in the week through Mar 29.

US Adds 15 Oil Rigs: Oil rig tally was 831, up from 816 in the week ended Mar 29. With this, the tally for oil drilling rigs rose in the seventh week after the count fell for six weeks in a row to the lowest level since April 2018. Moreover, the United States hasn’t added more than 15 oil rigs since last May.

Notably, the current total, far from the peak of 1,609 attained in October 2014, is higher than 808 a year ago.

Natural Gas Rig Count Raises in US: The natural gas rig count of 194 is higher than the count of 190 for the week ended Mar 29.

Moreover, the count of rigs exploring the commodity is in line with the prior-year quarter’s tally. Per the latest report, the number of natural gas-directed rigs is almost 88%, below the all-time high of 1,606 in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 54 units against the previous week’s 51. Moreover, 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) increased by 16 units to 971.

Gulf of Mexico (GoM) Rig Count Decreases: The GoM rig count is 22 units, of which 19 were oil-directed. The count was lower than the prior week’s 23.

Conclusion

Eight oil drilling rigs were added in the Permian Basin, while the Marcellus shale play witnessed the addition of three natural gas rigs. The addition of rigs in the prolific basins primarily resulted in an increase in the weekly rig count.

The price of West Texas Intermediate (WTI) crude is approaching the $65-per-barrel psychological mark, thanks to the ongoing cut in supply by OPEC and sanctions on Venezuela and Iran by the United States. Overall, the favorable crude pricing scenario is likely to help oil drillers keep adding rigs in the U.S. resources.

Amid this optimism, it would be a wise choice for investors to include a couple of oil stocks like Devon Energy Corporation (NYSE:DVN) and Parsley Energy, Inc. (NYSE:PE) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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