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Onshore Rig Count Rose: What about Offshore?

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Weekly offshore US rig count

For the week ending January 20, 2017, the US offshore rig count fell by one from the previous week to 24. On the other hand, land-based rigs rose by 36 units to 670. The rig count is an important yardstick for gauging the demand and outlook for the offshore drilling industry (XLE).

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Why is the rig count important?

The rig count tells us the number of rigs that are actively drilling. An increase in the rig count indicates a rise in demand for drilling activity. A decrease in the rig count indicates a fall in demand.

International rig count

The international offshore rig count for December 2016 was 210—down seven from 211 in November and down 40 from 250 in December 2015. On the other hand, the onshore rig count showed an uptick. It was at 719 at the end of December 2016—up from 714 in November.

Monthly rig count

According to Baker Hughes (BHI), the number of offshore rigs in the US rose to 23 at the end of December 2016 from 22 in November. On the other hand, the onshore rig count rose to 611 in December from 558 in November.

Although the onshore rig count is recovering slowly, this kind of recovery isn’t apparent in the offshore rig count. A low offshore rig count gives a bleak outlook for companies such as Ensco (ESV), Seadrill (SDRL), Seadrill Partners (SDLP), Noble (NE), Transocean (RIG), Atwood Oceanics (ATW), Diamond Offshore (DO), Rowan Companies (RDC), Pacific Drillers (PACD), and Ocean Rig (ORIG).

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