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US Rig Count Falls: Should You Keep an Eye on EOG & FANG Stocks?
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In its last 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 EOG Resources Inc. (EOG - Free Report) and Diamondback Energy (FANG - 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 Drops: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 587 in the week ended Sept. 27, lower than theweek-ago count of 588. Moreover, the current national rig count declined from the year-ago level of 623, 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 Sept. 27 totaled 567, in line with the prior week's count. In offshore resources, 19 rigs were operating, a decrease from the week-ago count of 20.
U.S. Oil Rig Count Falls: The oil rig count was 484 in the week ending Sept. 27, lower than the week-ago figure of 488. 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 502.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 99 exceeded the week-ago figure of 96. However, the count of rigs exploring the commodity was below the year-ago week’s tally of 116. 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, lower than the week-ago count of 15. 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 573 was in line with the prior-week level.
Rig Tally in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 306, which was lower than the week-ago figure of 307. The count was also below the prior-year level of 312.
Handsome Oil Prices Bolster Resilience: EOG, FANG to Gain
West Texas Intermediate (WTI) crude is currently trading above $70 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the strong pricing environment remains advantageous for energy producers. U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Image Source: Statista
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like EOG Resources and Diamondback Energy.
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company, carrying a Zacks Rank #3 (Hold), possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
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, 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 recent Endeavor merger has expanded FANG's presence in the Permian Basin, bringing its total pro forma footprint to about 838,000 net acres. As a result, the company now has a larger inventory of prime drilling locations, with a breakeven oil price below $40 per barrel.
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US Rig Count Falls: Should You Keep an Eye on EOG & FANG Stocks?
In its last 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 EOG Resources Inc. (EOG - Free Report) and Diamondback Energy (FANG - 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 Drops: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 587 in the week ended Sept. 27, lower than theweek-ago count of 588. Moreover, the current national rig count declined from the year-ago level of 623, 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 Sept. 27 totaled 567, in line with the prior week's count. In offshore resources, 19 rigs were operating, a decrease from the week-ago count of 20.
U.S. Oil Rig Count Falls: The oil rig count was 484 in the week ending Sept. 27, lower than the week-ago figure of 488. 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 502.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 99 exceeded the week-ago figure of 96. However, the count of rigs exploring the commodity was below the year-ago week’s tally of 116. 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, lower than the week-ago count of 15. 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 573 was in line with the prior-week level.
Rig Tally in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 306, which was lower than the week-ago figure of 307. The count was also below the prior-year level of 312.
Handsome Oil Prices Bolster Resilience: EOG, FANG to Gain
West Texas Intermediate (WTI) crude is currently trading above $70 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the strong pricing environment remains advantageous for energy producers. U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like EOG Resources and Diamondback Energy.
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company, carrying a Zacks Rank #3 (Hold), possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
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, 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 recent Endeavor merger has expanded FANG's presence in the Permian Basin, bringing its total pro forma footprint to about 838,000 net acres. As a result, the company now has a larger inventory of prime drilling locations, with a breakeven oil price below $40 per barrel.