Baker Hughes 2013 Annual Report Download - page 53

Baker Hughes Incorporated23
Baker Hughes Rig Count
Baker Hughes has been providing rig counts to the public since 1944. We gather all relevant data through our
field service personnel, who obtain the necessary data from routine visits to the various rigs, customers, contractors
and/or other outside sources. We base the classification of a well as either oil or natural gas primarily upon filings
made by operators in the relevant jurisdiction. This data is then compiled and distributed to various wire services
and trade associations and is published on our website. We believe the counting process and resulting data is
reliable; however, it is subject to our ability to obtain accurate and timely information. Rig counts are compiled
weekly for the U.S. and Canada and monthly for all international rigs. Published international rig counts do not
include rigs drilling in certain locations, such as Russia, the Caspian, Iran and onshore China because this
information is not readily available. Baker Hughes resumed publication in June 2012 of the rig count in Iraq for the
first time since August 1990.
Rigs in the U.S. and Canada are counted as active if, on the day the count is taken, the well being drilled has
been started but drilling has not been completed and the well is anticipated to be of sufficient depth to be a potential
consumer of our drill bits. In international areas, rigs are counted on a weekly basis and deemed active if drilling
activities occurred during the majority of the week. The weekly results are then averaged for the month and
published accordingly. The rig count does not include rigs that are in transit from one location to another, rigging up,
being used in non-drilling activities, including production testing, completion and workover, and are not expected to
be significant consumers of drill bits.
The Baker Hughes Rig Counts are an important business barometer for the drilling industry and its suppliers.
When drilling rigs are active they consume products and services produced by the oil service industry. Rig count
trends are governed by the exploration and development spending by oil and gas companies, which in turn is
influenced by current and future price expectations for oil and gas. Therefore, the counts may reflect the relative
strength and stability of energy prices and overall market activity. However, these counts should not be solely relied
on as other specific and pervasive conditions may exist that affects overall energy prices and market activity.
The rig counts are summarized in the table below as averages for each of the periods indicated.
2013 2012 2011
U.S. - onshore 1,705 1,871 1,846
U.S. - offshore 56 47 32
Canada 353 364 418
North America 2,114 2,282 2,296
Latin America 419 423 424
North Sea 42 40 38
Continental Europe 93 79 80
Africa 125 96 78
Middle East 372 356 291
Asia Pacific 246 241 256
Outside North America 1,297 1,235 1,167
Worldwide 3,411 3,517 3,463
2013 Compared to 2012
The rig count in North America decreased 7% in 2013 compared to 2012 primarily driven by a 23% decline in
natural gas-directed rigs. The oil-directed rig count declined 1%. The natural gas-directed rig count reflected a 31%
decrease in the U.S. offset by an 18% increase in Canada. The oil-directed rig count increased 1% in the U.S., but
decreased by 11% in Canada. Natural gas-directed drilling in the U.S. was negatively impacted by the continued
weakness in North America natural gas prices which discouraged new investment in natural gas fields. In Canada,
the increase in natural gas-directed rigs was driven by drilling in condensate rich zones in Alberta to service the oil
sands drilling activity. In Canada, many operators curtailed their oil-directed drilling plans in the second half of 2013