uploads///US Total Rig Counts

Must-know: Why US rigs lost the most in 11 months

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Dec. 4 2020, Updated 10:53 a.m. ET

U.S. total rig count down sharply

According to Baker Hughes, the U.S. total rig count decreased by 17 rigs—from 1,913 to 1,896—during the week ending August 22. Baker Hughes publishes rig counts every week.

This marked the first rig count decline in the past five weeks. The decline was also the largest since late September 2013.

The number of oil rigs went down by 25. The number of natural gas rigs increased by nine. Rigs that were categorized as “miscellaneous” lost one during the last week.

The decrease in rig count was led by decreases in horizontal rig drilling. See Part 3 of this series to learn more about vertical versus horizontal rigs.

Year-to-date (or YTD), the total U.S. rig count is still up by 145—or 8%. Oil rigs have added 186 rigs—up 13%. Natural gas rigs have decreased by 42—~11%.

Rig count trends show companies’ inclination to spend on drilling

Rig counts represent how many rigs are actively drilling for hydrocarbons—oil and gas. Baker Hughes noted that rig count trends are “governed by oil company exploration and development spending, which is influenced by the current and expected price of oil and natural gas.”

Rig counts can represent how confident oil and gas producers, like occidental Petroleum (OXY) and EOG Resources (EOG), are in the drilling environment.

Since rig counts show one measure of oil and gas drilling activity, the figure can gauge oilfield service companies’ activity levels. Oilfield services companies include Schlumberger (SLB) and Baker Hughes (BHI). Both of the companies are part of the Energy Select Sector SPDR (XLE).

Rising rig counts are a good sign for oil and gas producers. They’re also a good sign for oilfield service providers.

Continue reading the next parts in this series to learn more about the various types of rig counts, what they mean, and why they should matter to investors.

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