The Permian Basin has been driving vertical rigs
Permian leads in additions
The Permian Basin has the highest number of rigs in the U.S. Out of the 558 rigs in the Permian as of August 15, 2014, 57% are horizontal, 38% are vertical, and ~5% are directional.
In contrast, as of August 19, 2011, only ~18% of the rigs were horizontal versus ~79% vertical rigs. The share of directional rigs has increased marginally by ~2% during the period.
Key stocks and exchange-traded funds (or ETFs)
Rig counts can be a useful indicator to gauge the upstream activity of companies like Approach Resources Inc. (AREX), Laredo Petroleum Holdings Inc. (LPI), and Whiting Petroleum Corporation (WLL). These companies are part of the S&P Oil & Gas Exploration & Production ETF (XLE). WLL is also a component of the iShares US Energy ETF (IYE).
Most major oilfield service companies expect U.S. onshore rig counts to increase slightly in 2014 compared to 2013. The increase is driven mostly by higher activity in the Permian Basin in west Texas.
Continue reading the next part in this series to learn about U.S. oil rig counts.