HP Helmerich and Payne Inc

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported a dip in the U.S. rig count (number of rigs searching for oil and gas in the country), primarily reflecting a decrease in the tally of land rigs.

Interestingly, for the fourth week in a row there continues to be more rigs drilling for oil than gas – the first time this has happened since 1995 – as companies look to capitalize on soaring oil prices, which are currently trending at around $97 a barrel.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG), Diamond Offshore (DO), Noble Corp. (NE), Pride International (PDE), Nabors Industries (NBR), Patterson-UTI Energy (PTEN) and Helmerich & Payne (HP) in gauging the overall business environment of the oil and gas industry.

Weekly Summary

Rigs engaged in exploration and production in the U.S. totaled 1,830 for the week ended May 13, 2011. This is down by 6 from the previous week’s rig count and represents the first decline in 4 weeks.

Despite this, the current nationwide rig count is more than double that of the 6-year low of 876 (set in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,506. It rose to a 22-year high in 2008, peaking to 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations descended by 7 to 1,780, while inland waters activity fell by 2 to 17. However, offshore drilling was up by 3 to 33 rigs.  

Natural Gas Rig Count

The natural gas rig count decreased for the first time in 3 weeks to 874 (a drop of 16 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since January 29, 2010 and is down nearly 12% from its 2010 peak of 992 reached during mid-August.

The current natural gas rig count remains 46% below its all-time high of 1,606 in late summer 2008, but has rebounded strongly after bottoming out to a 7-year low of 665 on July 17, 2009. In the year-ago period, there were 951 active natural gas rigs.

Oil Rig Count

The oil rig count was up by 13 to 947. The current tally – the most in 23 years – is considerably higher than the previous year’s rig count of 544. It has recovered strongly from a low of 179 in June 2009, rising more than 5 times.

Miscellaneous Rig Count

The miscellaneous rig count (primarily drilling for geothermal energy), at 9, was down by 3 from the previous week.

Rig Count by Type

The number of vertical drilling rigs fell by 10 to 563, 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 up by 4 to 1,267. In particular, horizontal rig units rose by 3 in the latest week to hit a new all-time high of 1,041.

 
BAKER-HUGHES (BHI): Free Stock Analysis Report
 
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