As oil prices increase, rig count rises

New exploration projects result in higher revenue for oilfield services companies like Baker Hughes.

By Trefis Mar 9, 2012 10:05AM
Baker Hughes (BHI) recently released its weekly rig count for North America, reporting the highest level since 1987, the year the company started providing the breakup between oil and natural gas rigs.

The rig count in the U.S. touched 1,293, up 28 over the past week. Low gas prices are also forcing exploration and production (E&P) companies to shift activity toward oil-rich plays. These changing trends in the North American E&P scene are also likely to affect the performance of other oilfield services players such as Halliburton (HAL).

Baker Hughes Stock Break-Up

Oil exploration up

Oil prices have been rising over the past few weeks because of the political tensions in the Middle East and some improvements in the global economic outlook. High oil prices tend to spur investments in exploration and production activity by boosting the cash flows of upstream companies and improving their ability to generate finances for new projects.


New exploration projects increase the rig count and result in higher revenue for oilfield services companies like Baker Hughes, which provide an array of E&P as well as production enhancement services. High oil prices are also pushing companies to spend on technologies that can reduce the natural output declines seen in mature fields.


Baker Hughes Annual Avg Rig Count in North America

The tightness in the supply situation seen in the global oil markets is pushing prices up as the U.S. and E.U. seek to replace Iranian oil. The oil rig count is also increasing because low gas prices are forcing companies to target liquids exploration. The gas rig count in the U.S. has shown declines over the past eight weeks because of weak gas pricing.

Tags: BHIHAL

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

112
112 rated 1
270
270 rated 2
444
444 rated 3
693
693 rated 4
637
637 rated 5
692
692 rated 6
615
615 rated 7
498
498 rated 8
265
265 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.