North American Rig Count Down Sharply in Last Year (BHI, OIH)

Baker Hughes Incorporated (NYSE: BHI) has reported that the North American rig count totaled 2,230, down from 2,233 the week before and down from 2,423 in the same period a year ago. The weekly drop reflected the addition of 1 rig in the US and and the loss of 4 rigs in Canada. The decline of 193 year-over-year surpasses last week’s decline of 121 rigs at the same point in time.

The total number of US rigs reached 1,931, up from 1,930 in the previous week and down from 1,959 in the same period a year ago. The oil rig count is up by 377 rigs year-over-year while the number of US natural gas rigs has dropped by 401. Canadian oil rigs have declined by 98 year-over-year and natural gas rigs are down 67. The total number of Canadian rigs is now 299, down from 464 a year ago.

North American demand grew fastest in Texas and North Dakota, with gains of 25 and 17, respectively, year-over-year. The largest drops came in Louisiana and Pennsylvania, where rig counts fell by 48 and 44, respectively.

Earlier this week Baker Hughes reported that the international rig count (excluding North America) fell from 1,285 in June to 1,264 in July. The June count was the highest in more than two years, and the July total was the second highest.

Rig counts have been falling most in US natural gas drilling and growing fastest in US oil drilling. No surprise there as gas producers cut production in an effort to raise prices and oil producers drill more to take advantage of higher prices.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down -0.63% today, at $40.80 in a 52-week range of $32.54-$45.14. That’s still about 2% higher than the share price last week at this time.

Paul Ausick