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Permian Basin Adds Oil Drilling Rigs for 4 Straight Weeks

Nilanjan Banerjee
·4 min read

In its weekly release, Baker Hughes Company BKR reported an increase in the U.S. rig count.

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 Co. HAL, Schlumberger Ltd. SLB and Transocean Ltd. RIG.

Details

Total US Rig Count Increases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 312 in the week through Nov 13 versus the prior-week count of 300. Thus, after increasing for nine straight weeks, the tally jumped to the highest mark since May. Notably, the current national rig count is, however, below the year-ago level’s 806.

The number of onshore rigs in the week ending Nov 13 totaled 297 compared with the prior-week count of 286. Notably, the count of rigs operating in inland waters was two, same as the prior-week tally. Moreover, in the offshore resources, 13 rigs were operating, higher from the prior-week count of 12.

US Adds 10 Oil Rigs: Oil rig count was 236 in the week through Nov 13, compared with 226 in the week ended Nov 6. Investors should also note that the current tally of oil rigs, far from the peak of 1,609 attained in October 2014, is, however, below the year-ago 674.

Natural Gas Rig Count Increases in US: The natural gas rig count of 73 was higher than the prior-week count of 71. However, the count of rigs exploring the commodity is below the prior-year week’s 129. Importantly, per the latest report, the number of natural gas-directed rigs is 95.5% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 22 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 290 compares favorably with the prior-week level of 278.

Gulf of Mexico (GoM) Rig Count Rises: The GoM rig count is 13 units, of which all were oil-directed. The count was higher than the prior-week count of 12.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 153 versus the prior-week count of 146. Thus, the basin has been adding oil drilling rigs for four straight weeks. In the gas-rich Marcellus, the weekly tally for natural gas drilling rigs increased to 27 from the prior-week count of 25.

Outlook

Although the price of West Texas Intermediate (WTI) crude, hovering around $40 per barrel, is significantly below the 2020-beginning price of more than $60 mark, the commodity price has improved considerably over the past few months. The momentum is likely to continue since the market has witnessed positive vaccine results, raising hopes that fuel demand will recover soon.

Thus, oil and gas drillers are likely to continue to add rigs to shale plays since the pricing environment of the commodity is now gradually improving.

Meanwhile, investors may keep an eye on two energy stocks which are expected to benefit if the oil price rally sustains – Devon Energy Corp. DVN and Diamondback Energy Inc. FANG. 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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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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