US rig count
According to Baker Hughes (BHGE) data, the total US rig count fell from 1,083 in the week ending December 28 to 1,006 in the week ending March 29. The rigs fell by 77 in the first quarter of 2019. Active rigs consume products and services provided by oilfield services companies. Active rigs reflect the demand for products and services. A fall in active rigs likely indicates softness in the demand for oilfield services and products.
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The Permian Basin rig count saw the biggest fall among all of the basins. The Permian Basin’s total rig count fell from 486 in December to 454 in the week ending March 29. As the above graph shows, the total rig count rose by 19 in the week ending April 5 to 1,025 active rigs. The Permian Basin rigs rose to 462 in the week ending April 5.
Softness in drilling and completions activity impacts oilfield services stocks including Schlumberger (SLB), Halliburton (HAL), and National Oilwell Varco (NOV). The impact is expected to be reflected in these companies’ first-quarter performance.
The rig count alone can’t be taken as an indicator of the demand for services. A number of other factors play a role. One indicator is the inventory of drilled but uncompleted wells. To learn more, visit Market Realist’s Energy Equipment and Oilfield Services Research page.