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U.S. Rig Count Increases for the Fourth Consecutive Month
By: Zacks Equity Research | January 11, 2019

Baker Hughes, a GE company (BHGE - Free Report) , recently declared the rig count for December 2018. In the United States, the total number of rigs increased from the previous month, owing to a higher number of offshore rigs. This is the fourth consecutive increase in the U.S. monthly rig count.

More on the Rig Count

Baker Hughes’ data, issued at the end of every week since 1944, facilitates energy service providers gauge the overall business environment of the oil and gas industry.

A change in the Houston-based oilfield services players’ rotary rig count affects demand for energy services like drilling, completion and production provided by companies like Halliburton Company (HAL) , Schlumberger Limited (SLB) , Diamond Offshore Drilling, Inc (DO) and Transocean Ltd. (RIG).

Analysis of the Data

North America Rig Count

Total rig count in North America (the United States and Canada) for December 2018 was 1,219. The reported figure was lower than the November 2018 count of 1,275, but, higher than the year-ago level of 1,135.

U.S. rig:Total number of rigs in the United States was 1,078. This was higher than 1,077 rigs in November and 930 in the year-ago period.

Of the total U.S. rigs, land rigs were 1,054. This is lower than 1,055 rigs in the prior month, but, higher than 911 rigs in December 2017.

The number of U.S. offshore rigs in December 2018 was 24. This was higher than 22 rigs in November 2018 as well as 19 rigs in December 2017.

Canada rig: In Canada, the total rig count of 141 was lower than 198 in November 2018 and 205 in December 2017.

International Rig Count

Total international rig count (offshore and land) for the month of December came in at 1,025. The count was up by 34 in November. It is also higher than the tally of 954 recorded in December 2017.

Offshore rig: The offshore rig count for December 2018 was 234, higher than 206 in November and 191 in the prior-year comparable month.

Land Rig: The land rig count was 791 compared with 785 in November 2018 and 763 in December 2017.

Conclusion

After plummeting below $45-a-barrel, the price of West Texas Intermediate (WTI) crude is approaching $55, hoping the ongoing Trade war between China and the United States will settle down and will in turn strengthen global commodity demand.

Notably, the weak crude pricing scenario has not made any significant impact on the U.S. shale drillers as with the advancement of technologies, well costs have declined drastically. Since, breakeven oil price in the Permian play is lower than $30 a barrel — per Pioneer Natural Resources Company (PXD) — it will be a wise decision to keep a track on drillers operating in the prolific resource. Two such upstream stocks are Pioneer Natural Resources Company and Concho Resources Inc (CXO).

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