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Drillers Add Oil Rigs in Permian & Eagle Ford Shale Play

Zacks Equity Research

In its weekly release, Baker Hughes Company BKR reported an increase in the number of drilling rigs 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, Schlumberger Limited SLB, Diamond Offshore Drilling, Inc DO and Transocean Ltd. RIG.

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Details

Total US Rig Count Increases: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 813 in the week through Dec 20, compared with the prior-week’s count of 799. The current national rig count is, however, below the prior year’s 1080.

The number of onshore rigs, in the week ending Dec 20, totaled 788 versus the previous week’s 776. Moreover, the tally of rigs operating offshore plays through the week till Dec 20 was 24 versus the prior-week count of 23. In the inland waters, the count was one as compared to no rig activities a week ago.

US Adds 18 Oil Rigs: Despite conservative spending plans by U.S. drillers, oil rig count was 685 versus 667 in the week ended Dec 13. Since February 2018, drillers in the domestic plays added the highest number of rigs in a week. The current total, far from the peak of 1,609 attained in October 2014, is below the year-ago 883.

Natural Gas Rig Count Decreases in US: The natural gas rig count of 125 is lower than the prior-week count of 129. Moreover, the count of rigs exploring the commodity is lower than the prior-year week’s 197. Per the latest report, the number of natural gas-directed rigs is 92.2% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 56 units, higher than the prior-week count of 54. 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 757 is higher than the prior-week level of 745.

Gulf of Mexico (GoM) Rig Count Rises: The GoM rig count is 24 units, of which 23 were oil-directed. The count was higher than the prior-week tally of 23.

Rig Count in Major Basins

In Permian and Eagle Ford, drillers added 15 and 10 oil rigs, respectively, in the week through Dec 20. Notably, drillers in Permian are now adding rigs after the most prolific basin witnessed rig removal in seven of nine weeks.

Outlook

Investors should know that domestic drillers may continue to add rigs on optimism that the two big economies will sign the phase-one trade deal in early January, which will keep oil prices in the bullish territory.

Hence, it would be wise for investors to keep an eye on Permian drillers, contributing the most to the U.S. shale boom. Two Permian drillers that investors should keep an eye on are Diamondback Energy, Inc. FANG 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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Baker Hughes Company (BKR) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
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Zacks Investment Research