Total US Drilling Rig Tally Declines: Here's What It Means

Core Insights - The U.S. rig count has decreased, indicating a slowdown in drilling activities within the oil and gas industry [1][3][4] - Baker Hughes' weekly data is crucial for energy service providers to assess the business environment and demand for oilfield services [2] Rig Count Data - The total U.S. rig count was 603 for the week ended May 10, down from 605 the previous week and significantly lower than 731 a year ago, suggesting reduced drilling activity [3] - Onshore rigs totaled 584, down from 587, while offshore rigs increased to 19 from 18 [4] - The oil rig count decreased to 496 from 499, and is down from 586 a year ago, far below the peak of 1,609 in October 2014 [4] - The natural gas rig count rose to 103 from 102, but is still below the year-ago figure of 141, and is nearly 93.6% lower than the all-time high of 1,606 in 2008 [5] - Vertical drilling rigs increased to 15 from 13, while horizontal/directional rigs decreased to 588 from 592 [6] - The Permian Basin's oil and gas rig count was 314, down from 316 and below the prior-year level of 353 [7] Market Outlook - West Texas Intermediate crude prices are near $80 per barrel, which is favorable for exploration and production, yet drilling activities are slowing as companies focus on shareholder returns [8] - Investors may consider energy stocks like Diamondback Energy, Inc. and Matador Resources Company for medium to long-term gains [9] Company Highlights - Diamondback Energy reported improvements in average productivity per well in the Midland Basin and expects to grow production volumes due to favorable commodity pricing [10] - Matador Resources, with a strong presence in the Delaware Basin, anticipates a 23% increase in oil production this year, supported by promising oil prices [11]