US Rig Count Rises: Time to Keep an Eye on DVN & FANG Stocks?

Core Insights - The U.S. rig count has increased slightly to 586, up from 585 the previous week, but down from 622 a year ago, indicating a slowdown in drilling activities [4] - The oil rig count rose to 481 from 479 week-over-week, but is significantly lower than the peak of 1,609 in October 2014 and down from 501 year-over-year [5] - The natural gas rig count decreased to 101 from 102, and is also down from 117 year-over-year, reflecting a long-term decline in natural gas exploration [6] Industry Overview - Baker Hughes' weekly rig count data, published since 1944, serves as a key indicator for energy service providers to assess the oil and gas industry's business environment [2] - The increase in the rig count may suggest a demand trajectory for oilfield services, although some analysts express concerns about the efficiency of shale producers and their land availability for drilling [4] Rig Count Details - Onshore rigs totaled 567, up from 566, while offshore rigs remained stable at 18 [5] - The vertical drilling rig count fell to 12 from 14, while horizontal/directional rigs increased to 574 from 571 [7] - The Permian Basin, the most prolific area for oil and gas in the U.S., maintained a rig count of 304, down from 311 year-over-year [8] Market Conditions - Current West Texas Intermediate (WTI) crude prices are around $70 per barrel, creating a favorable environment for exploration and production despite a moderation in drilling activity [9] - U.S. oil and gas companies benefit from lower breakeven prices, with most new wells remaining below current market levels, supporting profitability [9] Company Highlights - Devon Energy has expanded its operations through a $5 billion acquisition of Grayson Mill Energy's Williston Basin business, enhancing its oil production and drilling locations [11] - Diamondback Energy has reported improvements in well productivity in the Midland Basin, indicating potential for increased production volumes [12] - The recent Endeavor merger has expanded Diamondback Energy's footprint in the Permian Basin to approximately 838,000 net acres, with a breakeven oil price below $40 per barrel [13]