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US Witnesses All-Time Low Oil & Gas Rig Tally for Second Week

Zacks Equity Research
·4 min read

In its weekly release, Baker Hughes Company BKR reported a drop 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 Company HAL, Schlumberger Limited SLB, Diamond Offshore Drilling, Inc DO and Transocean Ltd. RIG.

Details

Total US Rig Count Decreases: Rigs engaged in the exploration and production of oil and natural gas in the United States fell to an all-time low mark of 339 in the week through May 15, compared with the prior-week count of 374. The current national rig count is below the prior year’s 987.

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Investors should know that the recent weekly tally of oil & gas rigs touched a record low level, after touching the previous all-time low mark of 374 in the week through May 8, since the global fuel demand has been hit by the coronavirus pandemic.

The number of onshore rigs, in the week ending May 15, totaled 327 versus the previous week’s 359. Moreover, the tally of rigs operating offshore plays through the week till May 15 was 12, lower than the prior-week count of 15. Notably, no rigs operated in inland waters, same as it was in the prior week.

US Removes 34 Oil Rigs: Oil rig count was 258 in the week through May 15, compared with 292 in the week ended May 8. Importantly, since crude prices are in the bearish territory, explorers are cutting their capital budget considerably. This led the weekly tally of oil rigs to fall to the lowest mark since July 2009. Notably, among the upstream energy players in North America that decided to lower their capital budget for 2020 are Occidental Petroleum Corporation OXY and Marathon Oil Corporation MRO. Marathon Oil currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors should note that the current tally of oil rigs, far from the peak of 1,609 attained in October 2014, is also below the year-ago 802.

Natural Gas Rig Count Declines in US: The natural gas rig count of 79, a record low mark, is below the prior-week count of 80. Moreover, the count of rigs exploring the commodity is lower than the prior-year week’s 185. Per the latest report, the number of natural gas-directed rigs is 95% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 10 units, higher than the prior-week count of nine. However, 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 329 was lower than the prior-week level of 365.

Gulf of Mexico (GoM) Rig Count Declines: The GoM rig count is 12 units, of which all were oil-directed. The count was lower than the prior-week tally of 15.

Rig Count in Major Basins & Outlook

Permian — the most prolific basin in the United States — saw a drop in oil rig tally by 23 in the week ended May 15. Importantly, the count of oil rigs in Permian dropped for nine consecutive weeks. Moreover, drillers in the Eagle Ford shale play lowered oil rig count by three.

Notably, domestic drillers may continue to lower rigs in oil patches since global energy demand declined drastically owing to worldwide social distancing measures taken to combat the coronavirus pandemic.

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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Marathon Oil Corporation (MRO) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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Zacks Investment Research