U.S. Tally Of Oil Rigs Flat Amid Harvey Uncertainty

In its weekly release, Houston-based oilfield services player Baker Hughes, a GE company (NYSE:BHGE) , reported a decline in rigs searching for crude and natural gas in the country.

Details

Weekly Summary: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 943 in the week ended Sep 1 – higher than the previous week’s 940. This shows that the total rig count in the country has increased again after four straight weeks of a decline.

Since it slipped to an all-time low of 404 last May, rig count has been rising rapidly in American shale resources. Punctuated by a few pauses, the current nationwide rig count is considerably higher than the prior-year level of 497.

For the week in discussion, the improvement in rig count can be attributed to higher onshore activities.

Rig count in the onshore business increased by three units, while units engaged in offshore operations fell slightly to 16 from 17 in the prior week.

Oil Rig Count: Oil rig count was in line with the count of 759 recorded in the previous week. It is to be noted that the rigs exploring crude has decreased four times in the last seven weeks.

The current tally, though far from the peak of 1,609 attained in October 2014, is significantly above the previous year’s count of 407.

Natural Gas Rig Count: The natural gas rig count – which plunged to its lowest last August – jumped three units to 183. Like oil, the count of rigs for gas exploration sits comfortably above the year-ago tally of 88. As per the most recent report, the number of natural gas-directed rigs is nearly 89%, below the all-time high of 1,606 achieved in late summer 2008.

Rig Count by Type: The number of vertical drilling rigs rose by four units to 68, 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) was down by one to 875.

Gulf of Mexico (GoM): The GoM rig count went down to 16 units – 14 of which were oil-directed – from 17 counts.

Details of the Weekly Rig Count

Baker Hughes’ data, issued since 1944 at the end of every week, acts as an important yardstick for energy service providers in gauging the overall business environment of the oil and gas industry.

Change in Baker Hughes’ rotary rig count weighs heavily on the demand for energy services, drilling, completion, production, etc., provided by companies like Halliburton Company (NYSE:HAL) , Schlumberger Limited (NYSE:SLB) , Weatherford International plc (NYSE:WFT) , Diamond Offshore Drilling, Inc. (NYSE:DO) and Transocean Ltd. (NYSE:RIG) .

Conclusion

The number of rigs searching for natural gas in the United States increased, while that for oil remained flat. This shows that Hurricane Harvey, which was responsible for heavy downpour in the Texas and Louisiana states of the Gulf of Mexico (GoM) area, failed to lower exploration activities.

Although rig count in Texas fell by one unit and the count in Louisiana was flat as compared to the prior week, it seems that the storm has not been felt as much as apprehended.

However, the counts might not be exact as the storm kept Baker Hughes from confirming the increase or decrease in the number of rigs in almost 47 counties of South Texas.

After Harvey, some refiners are restarting their operations which led to a rally in the price of black gold. This is likely to prove beneficial for oil exploration and production companies. Two oil stocks that might make valuable additions to your portfolio are Range Resources Corporation (NYSE:RRC) RRC and Lonestar Resources US LONE. Both the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. We expect year-over-year earnings growth of almost 1,487.2% for Range Resources in 2017.

Headquartered in Fort Worth, TX, Lonestar explores oil and gas resources in the United States. The company is expected to witness 79.7% year-over-year earnings growth in 2017.

Zacks' 10-Minute Stock-Picking Secret

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.

Learn the secret >>