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Onshore Rig Count Climbing: What about Offshore Rig Count?

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Weekly US rig count

For the week ended April 21, 2017, the US offshore rig count fell by one to 20 after falling by one in the previous week. The rig count is down by six year-over-year. On the other hand, the onshore rig count rose by ten to 828, which is 103% higher than the count a year ago. 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 decline in demand.

International offshore rig count

The international offshore rig count for March 2017 was 197, down three rigs from 200 in the previous month. Compared to March 2016, the rig count was down by 14 rigs.

On the other hand, the onshore rig count has seen an uptick and stood at 943 at the end of March 2017, up from 941 in February.

Monthly rig count

According to Baker Hughes (BHI), the number of offshore rigs in the United States dropped to 19 at the end of March 2017 from 20 in February. This count is down 29% compared to the 27 rigs recorded in March 2016. The onshore rig count rose 6% in March to 770 from 724 in February.

Although the onshore rig count is climbing fast, the offshore rig count isn’t recovering. 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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