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US Rig Count Declines: Are FANG and MTDR Still Worth Watching?
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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.
Amid a declining weekly rig count, should investors keep an eye on leading oil and gas exploration companies like Diamondback Energy (FANG - Free Report) and Matador Resources (MTDR - Free Report) ? Before diving into that, let's explore the latest rig count data details.
Baker Hughes’ Data: Rig Count 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 583 in the week ended Aug. 30, lower than theweek-ago count of 585. Moreover, the current national rig count declined from the year-ago level of 631, 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. 30 totaled 563, lower than the prior week's count of 566. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Flat: The oil rig count was 483 in the week ending Aug. 30, which is in line with the week-ago figure. 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 512.
U.S. Natural Gas Rig Count Declines: The natural gas rig count of 95 was lower than the week-ago figure of 97. The count of rigs exploring the commodity was also below the year-ago week’s tally of 114. Per the latest report, the number of natural gas-directed rigs is 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 14 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 305, which was lower than the week-ago figure of 306. The count was also below the prior-year level of 319.
Rig Count Drops, Strong Oil Prices Provide Support
The West Texas Intermediate (WTI) crude price is trading at more than $70 per barrel, highly favorable for exploration and production operations. Although there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output, a handsome oil pricing environment is highly favorable for upstream energy companies as the average WTI price needed for U.S. oil and gas producers to stay profitable is much lower, both for new and existing wells.
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, likely to be completed in the third or 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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US Rig Count Declines: Are FANG and MTDR Still Worth Watching?
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.
Amid a declining weekly rig count, should investors keep an eye on leading oil and gas exploration companies like Diamondback Energy (FANG - Free Report) and Matador Resources (MTDR - Free Report) ? Before diving into that, let's explore the latest rig count data details.
Baker Hughes’ Data: Rig Count 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 583 in the week ended Aug. 30, lower than theweek-ago count of 585. Moreover, the current national rig count declined from the year-ago level of 631, 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. 30 totaled 563, lower than the prior week's count of 566. In offshore resources, 19 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Flat: The oil rig count was 483 in the week ending Aug. 30, which is in line with the week-ago figure. 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 512.
U.S. Natural Gas Rig Count Declines: The natural gas rig count of 95 was lower than the week-ago figure of 97. The count of rigs exploring the commodity was also below the year-ago week’s tally of 114. Per the latest report, the number of natural gas-directed rigs is 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 14 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 305, which was lower than the week-ago figure of 306. The count was also below the prior-year level of 319.
Rig Count Drops, Strong Oil Prices Provide Support
The West Texas Intermediate (WTI) crude price is trading at more than $70 per barrel, highly favorable for exploration and production operations. Although there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output, a handsome oil pricing environment is highly favorable for upstream energy companies as the average WTI price needed for U.S. oil and gas producers to stay profitable is much lower, both for new and existing wells.
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, likely to be completed in the third or 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.