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Must-know: The relationship between oil rigs and crude oil prices
Oil rigs have a positive relationship with crude oil prices and oil production. The number of rigs in play will loosely follow prices with a lag.
Vertical rigs are on a long-term declining trend. Vertical rigs are currently down 63% from around 990 in the beginning of 2007.
Last week, offshore rigs decreased by one compared to the previous week. The offshore rig count has been sliding after attaining its four-year high on August 29.
During the week ended October 17, the U.S. onshore, or land-based, rig count decreased by 11 from the previous week’s count of 1,861.
Currently, there are 1,590 oil rigs at work in the U.S. The Permian Basin has 558 of these rigs, more than any other region has.
The U.S. natural gas rig count was up by eight rigs, from 320 to 328, during the week ended October 17.
This week’s fall in oil rig count marked the third decrease in the past four weeks, and the highest decrease since August 22’s fall.
The U.S. rig count has been on the rise for the last couple of years, but last week marked the lowest rig count in the past seven weeks.
Analysts expect NOV’s debt to grow. This is probably a good thing for NOV. They also expect its free cash flows—NOV’s best feature—to grow even more.
The operating margin is a company’s ability to generate profits from operations. NOV’s operating margin shows the most encouraging sign yet.
For a company to be considered more profitable, the margins should be as high as possible. However, the levels will vary from industry to industry.
Even though NOV’s debt levels relative to its assets, equity, and EBITDA increased in the last couple of years, it’s still at very comfortable levels.
NOV’s share has been more or less where it was seven years ago. However, the company’s business has grown substantially in the meantime.
Enterprise value is the company’s “complete” value. It includes the market value of its equity—market capitalization. It also includes its net debt—debt less cash.
CFF is a key “intermediary” between a company and its sources of capital. It shows cash returned to shareholders through share repurchases and dividends.
CFI mainly includes capital expenditures (or capex) that a company makes towards growing its business. It also includes a company’s asset acquisitions.
A company’s cash flow from operations is the cash it earns from its business operations—the sale of products and services.
Working capital management is a key metric that’s used to gauge how a company manages its short-term assets and liabilities in its balance sheet.
NOV’s assets have almost tripled in the last seven years. The assets were just over $12 billion in 2007. They were just under $35 billion in 2013.
A company’s tax rates are usually fixed. Effective tax rates don’t vary much unless there have been some extraordinary events. NOV’s tax expenses moved broadly in line with its growing business.