The Baker Hughes (BHI) rig report on Friday showed an interesting divergence with the commodity markets. While natural gas has jumped some 60% in the past few months, the amount of rigs drilling for natural gas has plunged to lows not seen since 1999. In the last week, the natural gas rig count dropped another 15 to only 422. Last year, the count was 936.
For investors expecting that exploration companies can quickly turn on the drilling spigot, one needs to note the most concerning part of the report is that the percentage of rigs drilling for natural gas is the lowest ever at 23%. The concern is that limited rigs and service personnel might exist for a rebound in demand.
This is the first part of a series focusing on the potential beneficiaries and losers of a pending spike in natural gas prices while most of the available drilling rigs are focused on oil.
Read the full article at Seeking Alpha.
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