Permian Oil Rig Count Rises After 4 Straight Weeks of Decline
In its weekly release, Baker Hughes Company BKR stated that the U.S. rig count was higher than the prior-week tally. 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 prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.
Total U.S. Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 754 for the week ended Mar 17. The figure is higher than the prior week’s count of 746. Thus, the tally rose after declining for four straight weeks. The current national rig count is also higher than the year-ago level of 663.
The onshore rigs in the week ended Mar 17 totaled 736, higher than the prior week's count of 731. In offshore resources, 17 rigs were operating, higher than the prior week’s count of 14.
U.S. Oil Rig Count Falls: The oil rig count was 589 in the week ended Mar 17, lower than the prior-week figure of 590. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is, however, up from the year-ago figure of 524.
U.S. Natural Gas Rig Count Rises: Natural gas rig count of 162 is higher than the prior-week figure of 153. The count of rigs exploring the commodity is higher than the prior-year week’s tally of 137. Per the latest report, the number of natural gas-directed rigs is 89.9% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 15 units, higher than the prior-week count of 12 units. 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 739 is higher than the prior-week level of 734.
Gulf of Mexico (GoM) Rig Count Rises: GoM rig count was 16 units, all oil-directed. The count was higher than the prior-week number of 14.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 345, higher than the prior week's count of 339. Thus, the number increased after decreasing for four straight weeks.
The West Texas Intermediate crude price is trading at more than the $65-per-barrel mark, which is still highly favorable for exploration and production activities. Handsome oil prices will likely pave the way for rig additions despite a slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output.
Investors may keep a close eye on energy stocks like EOG Resources EOG and Diamondback Energy, Inc. FANG, as these companies are expected to benefit from the current healthy oil price scenario.
EOG Resources, currently carrying a Zacks Rank #3 (Hold), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has an estimated 11,500 net undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since it transitioned to premium drilling, the company has returned a handsome amount in cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.
Diamondback Energy is a leading pure-play Permian operator. FANG has expanded its footprint in the Midland basin since it acquired all leasehold interest and associated properties of Lario Permian, LLC – a wholly owned affiliate of Lario Oil & Gas Company. FANG, with a Zacks Rank of 3, also has an investment-grade balance sheet.
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