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Total US Drilling Rig Tally Falls: Here's What it Means
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In its weekly release, Baker Hughes Company (BKR - Free Report) stated that the U.S. rig count was lower than the prior week’s figure. 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 week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Falls: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 586 in the week ended Aug 16, lower than theweek-ago count of 588. Moreover, the current national rig count declined from the year-ago level of 642, reflecting the fact that there has been a slowdown in drilling activities. Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.
Onshore rigs in the week that ended on Aug 16 totaled 567, lower than the prior week's count of 569. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Falls: The oil rig count was 483 in the week ended Aug 16, lower than the week-ago figure of 485. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — was down from the year-ago figure of 520.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 98 was higher than the week-ago figure of 97. The count of rigs exploring the commodity was, however, below the year-ago week’s tally of 117. Per the latest report, the number of natural gas-directed rigs is almost 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 17 units, in line with the week-ago count. 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 569 was down from the prior-week level of 571.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 303, which was lower than the week-ago figure of 304. The count was also below the prior-year level of 327.
Outlook
The West Texas Intermediate crude price is trading at more than $75 per barrel, highly favorable for exploration and production operations. Although the commodity pricing scenario is handsome, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like Diamondback Energy, Inc. (FANG - Free Report) and Matador Resources Company (MTDR - Free Report) .
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the exploration and production company, carrying a Zacks Rank #3 (Hold), is likely to continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The pending Endeavor merger, expected to close in the fourth quarter of this year, will significantly increase its Permian footprint, which the company cited at a combined pro forma scale of approximately 838,000 net acres. With the merger, FANG will have more inventory of core drilling locations with a break-even oil price of less than $40 per barrel.
Matador Resources recently entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, the #3 Ranked company is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis. Consequently, the company estimates that its production will exceed 180,000 barrels of oil equivalent per day, positioning it for significant growth and enhanced operational scale.
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Total US Drilling Rig Tally Falls: Here's What it Means
In its weekly release, Baker Hughes Company (BKR - Free Report) stated that the U.S. rig count was lower than the prior week’s figure. 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 week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Falls: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 586 in the week ended Aug 16, lower than theweek-ago count of 588. Moreover, the current national rig count declined from the year-ago level of 642, reflecting the fact that there has been a slowdown in drilling activities. Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.
Onshore rigs in the week that ended on Aug 16 totaled 567, lower than the prior week's count of 569. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Falls: The oil rig count was 483 in the week ended Aug 16, lower than the week-ago figure of 485. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — was down from the year-ago figure of 520.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 98 was higher than the week-ago figure of 97. The count of rigs exploring the commodity was, however, below the year-ago week’s tally of 117. Per the latest report, the number of natural gas-directed rigs is almost 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 17 units, in line with the week-ago count. 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 569 was down from the prior-week level of 571.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 303, which was lower than the week-ago figure of 304. The count was also below the prior-year level of 327.
Outlook
The West Texas Intermediate crude price is trading at more than $75 per barrel, highly favorable for exploration and production operations. Although the commodity pricing scenario is handsome, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like Diamondback Energy, Inc. (FANG - Free Report) and Matador Resources Company (MTDR - Free Report) .
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the exploration and production company, carrying a Zacks Rank #3 (Hold), is likely to continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The pending Endeavor merger, expected to close in the fourth quarter of this year, will significantly increase its Permian footprint, which the company cited at a combined pro forma scale of approximately 838,000 net acres. With the merger, FANG will have more inventory of core drilling locations with a break-even oil price of less than $40 per barrel.
Matador Resources recently entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, the #3 Ranked company is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis. Consequently, the company estimates that its production will exceed 180,000 barrels of oil equivalent per day, positioning it for significant growth and enhanced operational scale.