U.S. Rig Count Retreats

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI - Analyst Report) reported a fall in the U.S. rig count (number of rigs searching for oil and gas in the country), primarily reflecting decreases in the land and offshore rig counts for natural gas drilling.



The Baker Hughes rig counts, issued since 1944, act as an important yardstick for drilling contractors like Transocean Inc. (RIG - Analyst Report), Diamond Offshore (DO - Analyst Report), Noble Corp. (NE - Analyst Report), Pride International (PDE - Analyst Report), Nabors Industries (NBR - Analyst Report), Patterson-UTI Energy (PTEN - Analyst Report) and Helmerich & Payne (HP - Analyst Report) in gauging the overall business environment of the oil and gas industry.


Weekly Summary


Rigs engaged in exploration and production in the U.S. totaled 1,677 for the week ended November 19, 2010. This is down by 8 rigs from the previous week’s rig count and represents the first decline in 4 weeks. Despite this, the current nation-wide rig count is 91% higher than the 2009 low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,113. It rose to a 22-year high in 2008, peaking to 2,031 in the weeks ending August 29 and September 12.


Rigs engaged in land operations descended by 5 rigs to 1,637, offshore drilling decreased by 3 rigs to 20, while inland waters activity remained steady at 20 rigs.


Natural Gas Rig Count

The natural gas rig count decreased for the fourth time in six weeks to 936 rigs (a loss of 19 from the previous week). Despite the weekly decline, the number of gas-directed rigs are just 56 short of the 18-month high reached during mid-August, rebounding strongly after bottoming out to a 7-year low of 665 on July 17, 2009. Still, the rig count remains 42% below its peak of 1,606 in late summer 2008. In the year-ago period, there were 726 active natural gas rigs.


Oil Rig Count

The oil rig count was up by 11 rigs to 731, the 15th gain in the last 18 weeks. The current tally is considerably higher than the previous year’s rig count of 375. It has recovered nicely from a low of 179 in June 2009, more than quadrupling in number.


Miscellaneous Rig Count


The miscellaneous rig count (primarily drilling for geothermal energy) at 10 remained unchanged from the previous week.


Rig Count by Type


The number of vertical drilling rigs was down 4 to 532, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) also fell by the same number to 1,145.

This is an extract from http://www.zacks.com/stock/news/43621/U.S.+Rig+Count+Retreats