In its weekly release, Houston-based oilfield services player Baker Hughes, a GE company BHGE, reported an increase in total rig counts in the United States.

About the Rig Count

Baker Hughes’ data, issued since 1944 at the end of every week, helps energy service providers gauge the overall business environment of the oil and gas industry.

Change in Baker Hughes’ rotary rig count dents demand for energy services like drilling, completion and production provided by the likes of Halliburton Company HAL, Schlumberger Ltd. SLB, Weatherford International plc WFT, Diamond Offshore Drilling, Inc. DO and Transocean Ltd. RIG.

Details

Weekly Summary: Rigs engaged in the exploration and production of oil and natural gas in the United States totaled 931 in the week ended Dec 8 — higher than the prior week’s 929. This marked an increase for five consecutive weeks after the tally fell for five weeks in a row.

Since it slipped to an all-time low of 404 last May, rig count has been rising rapidly in U.S. shale resources. Punctuated by a few pauses, the current nationwide rig count is considerably higher than the prior-year level of 624.   

For the week in discussion, the rise in rig count can be attributed to increased onshore operations. The count of rigs engaged in onshore works rose from 908 to 909. The tally for offshore activities remained in line with the count for the week ended Dec 1.

Two rigs operated in the inland waters last week, higher than one rig for the week ended Dec 1.

Oil Rig Count: Oil rig count of 751 was higher than 749 in the prior week. Also, the current tally, though far from the peak of 1,609 attained in October 2014, is significantly above the previous year’s count of 498.

Natural Gas Rig Count: The natural gas rig count — which plunged to its lowest level last August — of 180, was in line with the count for the week ended Dec 1. Moreover, like oil, the count of rigs for gas exploration sits comfortably above the year-ago tally of 125.     

As per the most recent report, the number of natural gas-directed rigs is almost 89% below the all-time high of 1,606 achieved in late summer 2008.        

Rig Count by Type: The number of vertical drilling rigs of 64 units fell from 66. However, the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) increased by four units to 867.

Gulf of Mexico (GoM): The GoM rig count stands at 20 units — 16 of which were oil-directed — in line with the count for the week ended Dec 1.

Conclusion

The number of rigs exploring oil in the United States has increased, while the count of rigs searching for natural gas remained the same. Naturally, the total oil and gas rig count has increased, primarily supported by the addition of three rigs in each of Permian basin, Marcellus, Eagle Ford and Haynesville shale plays.

A healthy crude price scenario owing to the consistent compliance of the OPEC members with the historical production curb deal have been encouraging U.S drillers to ramp up upstream operations in prospective shale plays.  

Two oil stocks that should make valuable additions to your portfolio are Northern Oil and Gas, Inc. NOG and Approach Resources, Inc. AREX. Northern Oil and Gas sports a Zacks Rank #1 (Strong Buy), while Approach Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Based in Minnetonka, MN, Northern Oil and Gas is primarily engaged in exploration and development activities. We expect the company to see year-over-year revenue growth of 47.3% in 2017.

Headquartered in Fort Worth, TX, Approach Resources explores oil and gas resources in the domestic shale plays. The company will likely witness year-over-year earnings growth of 65.4% in 2017.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7% and +90.2%, respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Weatherford International PLC (WFT) : Free Stock Analysis Report
 
Schlumberger N.V. (SLB) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
 
Northern Oil and Gas, Inc. (NOG) : Free Stock Analysis Report
 
Approach Resources Inc. (AREX) : Free Stock Analysis Report
 
Baker Hughes Incorporated (BHGE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research