Baker Hughes Incorporated (NYSE: BHI) has reported that the North American rig count totaled 2,232 this week, down from 2,240 the week before and down from 2,483 in the same period a year ago. The decrease reflected the addition of 6 oil rigs and 2 natural gas rigs in Canada, while US oil rigs fell by 17 and US natural gas rigs increased by 2. One ‘miscellaneous’ rig was also deleted, bringing the total US loss for the week to 16.
The total number of U.S. rigs fell to 1,898 from 1,914 in the previous week and down from 1,975 in the same period a year ago. The oil rig count is up by 339 rigs year-over-year while the number of U.S. natural gas rigs has dropped by 412. Canadian oil rigs have declined by 98 year-over-year and natural gas rigs are down 76.
The number of North American rigs continues to decline as U.S. producers reduce drilling for dry gas and concentrate more on oil and wet gas rigs. But even that growth is slowing. The year-over-year increase in U.S. oil rigs by 339 is lower than the previous week’s growth of 359 rigs. In the first week of August, the total number of U.S. oil rigs was 398 higher than in the same period last year.
Higher drilling costs and still low prices for natural gas and falling prices for natural gas liquids are having an effect on the North American rig counts. Oil field services companies like Baker Hughes, Schlumberger Ltd. (NYSE: SLB) and Halliburton Co. (NYSE: HAL) could experience some pain in the second half of the year.
The Market Vectors Oil Services ETF (NYSEMKT: OIH) is up 0.15% today, at $40.91 in a 52-week range of $32.54-$45.14.
Paul Ausick
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