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Cana Woodford, DJ-Niobrara & Eagle Ford Add Oil Drilling Rigs

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Baker Hughes, a GE company (BHGE) reported a rise in the 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 service player’s rotary rig count affects demand for energy services like drilling, completion and production provided by the likes of Halliburton Company (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) , Diamond Offshore Drilling, Inc and Transocean Ltd. (RIG - Free Report) .

Details

Total US Rig Count Rises: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 935 in the week through Aug 16, higher than the prior-week count of 934. The current national rig count is, however, below the prior year’s 1057.

The number of onshore rigs, in the week ending Aug 16, totaled 907 versus previous week’s 909. However, the tally of rigs operating offshore plays through the week till Aug 16 was 27, higher than the prior week’s 25. Moreover, one rig operated in inland waters and no rigs were employed through the week ended Aug 9.

US Adds 6 Oil Rigs: Oil rig count was 770, up from 764 in the week ended Aug 9. This signifies that in the past seven weeks, drillers have managed to increase the tally for the first time. The current total, far from the peak of 1,609 attained in October 2014, is however, lower than 869 a year ago.

Natural Gas Rig Count Falls in US: The natural gas rig count of 165 is lower than the count of 169 for the week ended Aug 9.

Moreover, the count of rigs exploring the commodity is lower than the prior-year week’s 186. Per the latest report, the number of natural gas-directed rigs is 89.7%, below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 52 units, in line with the prior-week count. 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) of 883 was above the prior-week level of 882.

Gulf of Mexico (GoM) Rig Count Increases: The GoM rig count is 25 units, of which 23 were oil-directed. The count was higher than the prior-week tally of 23.

Rig Count in Major Basins & Outlook

Although Permian — the most prolific basin — removed three oil rigs in the week ended Aug 16, a few other resources like Cana Woodford, DJ-Niobrara and Eagle Ford have added drilling rigs for crude. While Cana Woodford added two rigs, DJ-Niobrara and Eagle Ford have each employed one rig.

Investors should know that domestic drillers may not continue to add rigs in the oil patches since the crude pricing scenario is weak and U.S. drillers have a conservative capital spending plan for this year.  Despite the bearish landscape, it would be wise for investors to keep an eye on Permian drillers which are producing more crude with the deployment of lesser rigs. Two Permian drillers that should be in investors’ watch list are Devon Energy Corporation (DVN) and Pioneer Natural Resources Company (PXD). Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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