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Permian Oil Rig Count Increases Amid High Crude Price

In its weekly release, Baker Hughes Company BKR reported that the U.S. rig count was higher than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.

Details
Total U.S. Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 733 for the week ended Jun 10. The figure is higher than the prior week’s count of 727. The current national rig count is higher than the year-ago level of 461.

The onshore rigs in the week ended Jun 10 totaled 715 compared with the prior week’s count of 710. In offshore resources, 15 rigs were operating, lower than the prior-week count of 16.

U.S. Oil Rig Count Rises: Oil rig count was 580 for the week ended Jun 10, higher than the prior week’s figure of 574. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is up from the year-ago figure of 365.

U.S. Natural Gas Rig Count Flat: Natural gas rig count of 151 was in line with the prior-week figure. The count of rigs exploring the commodity is higher than the prior-year week’s tally of 96. Per the latest report, the number of natural gas-directed rigs is 91% lower than the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 27 units, higher than the prior-week count of 25. Horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 706 compared favorably with the prior-week level of 702.

Gulf of Mexico (GoM) Rig Count Declines: GoM rig count was 14 units, all oil-directed. The count was lower than the prior-week number of 15 units.

Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 344, higher than the prior-week count of 341. In the Eagle Ford, the tally for weekly oil drilling rigs was 59, higher than the prior-week count of 57.

Outlook
The West Texas Intermediate crude price is trading higher than the $115-per-barrel mark, reflecting a massive improvement from last year. Higher oil prices will likely pave the way for rig additions despite a slowdown in drilling activities as upstream players mainly focus on stockholder returns rather than boosting output.

Meanwhile, investors may keep a close eye on energy stocks like Whiting Petroleum Corporation WLL and Continental Resources, Inc. CLR. The companies are expected to benefit from the current healthy oil price scenario.

Whiting Petroleum is a leading upstream energy company and the top producer of crude oil in North Dakota. With oil prices improving rapidly, Whiting Petroleum is expected to continue generating handsome cash flows while maintaining a healthy balance sheet.

Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Looking at the price chart, WLL has gained 77.7% over the past year, outpacing the 62.4% rise of the composite stocks belonging to the industry. WLL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Considering the price chart, Continental Resources — currently carrying a Zacks Rank #3 — has gained 103.0% in the past year, outpacing the 62.5% rise of the composite stocks belonging to the industry.

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