Permian Oil Rig Count Increases for Two Straight Weeks
In its weekly release, Baker Hughes Company BKR stated that the U.S. rig count was higher than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
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. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.
Details
Total U.S. Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 758 for the week ended Mar 24. The figure is higher than the prior week’s count of 754. Thus, the tally rose for two straight weeks. The current national rig count is also higher than the year-ago level of 670.
The onshore rigs in the week ended Mar 24 totaled 739, higher than the prior week's count of 736. In offshore resources, 18 rigs were operating, higher than the prior week’s count of 17.
U.S. Oil Rig Count Rises: The oil rig count was 593 in the week ended Mar 24, higher than the prior-week figure of 589. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is also up from the year-ago figure of 531.
U.S. Natural Gas Rig Count Flat: Natural gas rig count of 162 is the same as the prior-week figure. The count of rigs exploring the commodity is higher than the prior-year week’s tally of 137. Per the latest report, the number of natural gas-directed rigs is 89.9% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 16 units, higher than the prior-week count of 15 units. 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) of 742 is higher than the prior-week level of 739.
Gulf of Mexico (GoM) Rig Count Rises: GoM rig count was 17 units, all oil-directed. The count was higher than the prior-week number of 16.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 348, higher than the prior week's count of 345. Thus, the number increased for two straight weeks.
Outlook
The West Texas Intermediate crude price is trading at more than the $65-per-barrel mark, which continues to be highly favorable for exploration and production activities. Handsome oil prices will likely pave the way for rig additions despite a slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output.
Investors may keep a close eye on energy stocks like EOG Resources EOG and Diamondback Energy, Inc. FANG, as these companies are expected to benefit from the current healthy oil price scenario.
EOG Resources, currently carrying a Zacks Rank #3 (Hold), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has an estimated 11,500 net undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since it transitioned to premium drilling, the company has returned a handsome amount of cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.
Diamondback Energy is a leading pure-play Permian operator. FANG has expanded its footprint in the Midland basin since it acquired all leasehold interest and associated properties of Lario Permian, LLC – a wholly owned affiliate of Lario Oil & Gas Company. FANG, with a Zacks Rank of 3, also has an investment-grade balance sheet.
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