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Permian Oil Drilling Rig Count Drops for 2 Straight Weeks

In its weekly release, Baker Hughes Company BKR reported an increase in the U.S. rig count than the prior week. The rotary rig count, issued by Baker Hughes, usually gets published in major newspapers and trade publications.

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers to gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.

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 588 for the week through Jan 7, higher than the prior-week count of 586. Thus, the tally has increased in nine of the prior 11 weeks. The current national rig count is also higher than the year-ago level of 360.

The number of onshore rigs for the week ended Jan 7 totaled 570, in line with the prior-week count. In offshore resources, 16 rigs were operating, higher than the prior-week count of 15.

US Oil Rig Count Rises: Oil rig count was 481 for the week ended Jan 7, higher than the prior-week figure of 480. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — has also increased from the year-ago figure of 275.

Natural Gas Rig Count Rises in US: Natural gas rig count of 107 was higher than the prior-week figure of 106. The count of rigs exploring the commodity was also higher than the prior-year week’s tally of 84. Per the latest report, the number of natural gas-directed rigs is 93.3% lower than the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 23 units, lower than the prior-week count of 26. 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 565, however, compared favorably with the prior-week level of 560.

Gulf of Mexico (GoM) Rig Count Rises: GoM rig count was 16 units, all being oil-directed. The count was higher than the prior-week number of 15.

Rig Count in the Most Prolific Basin

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 292, lower than the prior-week count of 293. The basin's oil drilling rig count decreased for two successive weeks after increasing for six straight weeks.

Outlook

The West Texas Intermediate crude price is trading above $79 per barrel, marking a massive improvement of more than 51% from the past year. With coronavirus vaccines being rolled out on a massive scale and the announcements that booster doses and antiviral pills are effective against Omicron, the economy will possibly overcome the recent spike in coronavirus cases. This is making the fuel demand outlook bright and hence will pave the way for rig additions despite a slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output.

Meanwhile, investors may keep a close eye on energy stocks like Whiting Petroleum Corporation WLL and Continental Resources, Inc. CLR. The companies are expected to benefit from the current healthy oil price scenario.

Whiting Petroleum is a leading upstream energy company and the top producer of crude oil in North Dakota. With oil prices improving at a healthy pace, Whiting Petroleum is expected to continue generating handsome cash flows while maintaining a healthy balance sheet.

Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2022 in the past 60 days. Looking at the price chart, WLL has gained 172.7% over the past year, outpacing the 83.1% improvement of the composite stocks belonging to the industry. WLL currently carries a Zacks Rank #3 (Hold). You can see /www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICID=zpi" target="_blank" rel="nofollow" rel="nofollow">https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICID=zp... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 in the past 30 days. Considering the price chart, #3 Ranked Continental Resources has gained 155.2% over the past year, outpacing the 83.1% improvement of the composite stocks belonging to the industry.


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Continental Resources, Inc. (CLR): Free Stock Analysis Report
 
Baker Hughes Company (BKR): Free Stock Analysis Report
 
Whiting Petroleum Corporation (WLL): Free Stock Analysis Report
 
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