Oil prices and gasoline prices are going through the roof.
However, drilling contractors such as Helmerich & Payne, Nabors Industries, Patterson-UTI Energy, Pride International, and Transocean, want you to know that it is not for want of drilling activity that prices are high. They are busier than ever trying to get the oil and gas out of the ground.
The reasons for higher prices are market unease about the stability of oil-producing countries in the Middle East and North Africa as pro-democracy movements confront their various governments, and oil speculators piling on.
However, the oil industry is taking advantage of the higher commodity prices and increased demand for oil and gas to make profits while they are there for the taking. Oil majors and secondary players are enlisting contract drillers and other oilfield services companies to help explore for and produce oil and gas in the financially favorable environment. According to the Baker Hughes rig count (a weekly report which since 1944 has been measuring the overall health of the oil and gas industry by recording drilling rig activity) some 1,782 rigs (mainly onshore) were engaged in exploration and production in the US for the week ended April 8, 2011. This is the highest level of US rig activity since December 12, 2008.
For perspective, in June 2009, as the global recession and low commodity prices slashed demand for oil and gas exploration and production activity, the rig count hit a 6-year low of 876. In recent months the demand for rigs has come roaring back.
And it is not just drillers that are making hay. Seismic surveying companies are also becoming more active as oil companies hire them for their geophysical services that help locate new oil and gas reservoirs. Case in point, Dawson Geophysical reported that it had to slash its operational data acquisition crews from sixteen in January 2009 to nine in October 2009 in the wake of the recession. In 2010 increased demand allowed it to add three data acquisition crews, and it is looking to expand further in 2011.
So, with the exception of the Gulf of Mexico, where the Deepwater Horizon disaster and subsequent six-month moratorium on deepwater drilling slowed activity, it really is “Drill, Baby, Drill” time in America again. Oil companies, oilfield services, and oilfield equipment companies are all cashing in.