Permian Basin Oil Rig Count Flat, Eagle Ford Tally Declines

In its weekly release, Baker Hughes Company BKR reported that the U.S. rig count was lower than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.

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. 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 U.S. Rig Count Declines: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 750 for the week ended Jul 1. The figure is lower thanthe prior week’s count of 753. The current national rig count is higher than the year-ago level of 475.

The onshore rigs in the week ended Jul 1 totaled 730 compared with the prior week’s count of 734. In offshore resources, 17 rigs were operating, higher than the prior-week count of 16.

U.S. Oil Rig Count Rises: Oil rig count was 595 for the week ended Jul 1, higher than the prior week’s figure of 594. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is up from the year-ago figure of 376.

U.S. Natural Gas Rig Count Declines: Natural gas rig count of 153 was lower than the prior-week figure of 157. The count of rigs exploring the commodity is higher than the prior-year week’s tally of 99. Per the latest report, the number of natural gas-directed rigs is 90.5% lower than the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 25 units, lower than the prior-week count of 27. 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 725 compared unfavorably with the prior-week level of 726.

Gulf of Mexico (GoM) Rig Count Rises: GoM rig count was 16 units, all 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 348, in line with the prior week's count. In the Eagle Ford, the tally for weekly oil drilling rigs was 60, lower than the prior-week count of 62.

Outlook

The West Texas Intermediate crude price is trading higher than the $100-per-barrel mark, reflecting a massive improvement in the past year. Higher oil prices will likely 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 EOG Resources EOG and Continental Resources, Inc. CLR. The companies are expected to benefit from the current healthy oil price scenario.

EOG Resources, a leading oil and natural gas exploration and production company carrying a Zacks Rank #3 (Hold), is well placed to capitalize on the crude rally. EOG has estimated roughly 11,500 net undrilled premium locations, resulting in a brightened production outlook. In the Eagle Ford shale play alone, EOG identified 1,900 undrilled premium locations, while in the prolific Delaware Basin, the upstream firm identified 6,300 drilling sites.

EOG Resources is strongly committed to returning capital to shareholders. Since its transition to premium drilling, EOG Resources has returned more than $10 billion in cash to stockholders. With the employment of premium drilling, EOG will be able to reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.

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

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. CLR — currently carrying a Zacks Rank #2 (Buy) — has gained 67.7% in the past year, outpacing the 29.5% rise of the composite stocks belonging to the sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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