Benzinga - by Zacks, Benzinga Contributor.
In its weekly release, Baker Hughes Company (NASDAQ: BKR) stated that the U.S. rig count was lower than the prior week's figure. 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 week-ago figure indicates the demand trajectory for the company's oilfield services from exploration and production companies.
Rig Count Data in Detail Total U.S. Rig Count Falls: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 588 in the week ended Jun 21, lower than theweek-ago count of 590. The current national rig count also declined from the year-ago level of 682, reflecting the fact that there has been a slowdown in drilling activities. Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.
Onshore rigs in the week that ended on Jun 21 totaled 567, lower than the prior week's count of 569. In offshore resources, 21 rigs were operating, in line with the week-ago count.
U.S. Oil Rig Count Declines: The oil rig count was 485 in the week ended Jun 21, lower than the week-ago figure of 488. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — was also down from the year-ago figure of 546.
U.S. Natural Gas Rig Count Flat: The natural gas rig count of 98 was in line with the week-ago figure. However, the count of rigs exploring the commodity was below the year-ago week's tally of 130. Per the latest report, the number of natural gas-directed rigs is almost 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 19 units, which was lower than the week-ago count of 20. 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 569 was down from the prior-week level of 570.
Rig Count in the Most Prolific Basin Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 308, lower than the week-ago figure of 309. The count also declined from the prior-year level of 341.
Outlook The West Texas Intermediate crude price has already touched the $80-per-barrel mark, highly favorable for exploration and production operations. Although the commodity pricing scenario is handsome, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like Diamondback Energy, Inc. (NASDAQ: FANG) and Matador Resources Company (NYSE: MTDR).
Diamondback Energy, a leading pure-play Permian operator, reported ongoing enhancements in the average productivity per well in the Midland Basin. The exploration and production company expects to maintain growth in production volumes, benefiting from favorable commodity pricing conditions. FANG, carrying a Zacks Rank #3 (Hold), also has an investment-grade balance sheet.
Matador Resources recently entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, the Zacks #3 Ranked company is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis. Consequently, the company estimates that its production will exceed 180,000 barrels of oil equivalent per day, positioning it for significant growth and enhanced operational scale.
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