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Why the Permian Basin has been driving horizontal rig count records

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The Permian Basin

Out of the current 1,575 oil rigs at work, the majority—roughly 552—are in the Permian Basin. The Eagle Ford has 196 rigs, the Williston and Bakken have 192 rigs, and the Mississippian has 79 rigs.

Permian

The Permian Basin has the highest number of rigs in the U.S. There were 557 rigs in the Permian Basin as of August 29, 2014. Horizontal rigs account for 57%, vertical rigs account for 39%, and directional rigs account for ~4%.

As of August 26, 2011, only ~18% of the rigs were horizontal. At that time, rigs in the Permian were mainly vertical at ~78%. The share of directional rigs was ~3% during the period.

Key stocks and ETFs

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Rig counts in the Permian Basin can gauge drilling activities of upstream companies predominantly active in the Permian—like Chevron Corporation (CVX), Anadarko Petroleum Corporation (APC), Approach Resources (AREX), and Southwestern Energy Company (SWN). Some of these companies are part of the S&P Oil & Gas Exploration & Production ETF (XLE).

Most major oilfield service companies expect U.S. onshore rig counts to increase in 2014 compared to 2013. The increase will be driven by higher activity in the Permian Basin in west Texas.

Continue reading the next part of this series to learn about U.S. oil rig counts.

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