US total rig count increases
Baker Hughes (BHI) is an oilfield service company. According to BHI, there were 1,920 active oil and gas rigs in the US during the week ending December 5. That’s three rigs more than the week ending November 26. The figure marks the fifth rig count increase in the past two months.
The US rig count increased this year. There were occasional declines, but nothing significant. This week’s increase indicates US rigs’ reversal to the upward trend after the last week’s decline.
On a monthly basis, November’s average rig count of 1,925 didn’t change from October’s average, according to BHI. September’s average rig count of 1,931 was the highest US rig count since July 2012.
Why rigs increased last week
Last week’s increase was mainly a result of oil rigs’ additions. The number of oil rigs increased by three. The number of natural gas rigs didn’t change in the week. Also, miscellaneous rigs stayed the same.
The increase in the offshore rig count led to the increase in the US rig count this week. See Part 6 of this series to learn more about onshore versus offshore rigs.
Year-to-date (or YTD), the total US rig count was up by 169—or ~10%. Oil rigs increased by 197—up 14%. Natural gas rigs decreased by 28—or ~8%. In the same period in 2013, total rigs increased by 13.
Rig count trends show companies’ inclination to spend on drilling
Rig counts tell us how many rigs are actively drilling for oil and gas. They can indicate oil and gas producers’ confidence. Companies in the drilling environment include ExxonMobil (XOM) and Hess Corporation (HES). These companies are part of the Energy Select Sector SPDR ETF (XLE).
The rig count is one measure of oil and gas drilling activity. It’s used by oilfield service companies like BHI. BHI is part of the VanEck Vectors Oil Services ETF (OIH) and the SPDR S&P 500 ETF (SPY).
Falling rig counts could be a concern for oil and gas producers. Falling rig counts are also negative for oilfield service providers. In this series, you’ll learn what influenced natural gas and oil rig counts last week.