Here are highlights from Monday’s Analyst Blog:

Nat Gas Rig Count at 10-Year Low

In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (NYSE: BHI) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country). This can be attributed to an increase in the tally of oil-directed rigs, partially offset by cutbacks in natural gas and miscellaneous rig counts.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (NYSE: RIG) in gauging the overall business environment of the oil and gas industry.

Analysis of the Data

Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,984 for the week ended March 16, 2012. This was up by 11 from the previous week’s count and represents the third decrease in 5 weeks.

The current nationwide rig count is more than double that of the 6-year low of 876 (in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,720. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations climbed by 6 to 1,920, inland waters activity increased by 3 to 21, while offshore drilling was up by 2 to 43 rigs.

Natural Gas Rig Count: The natural gas rig count decreased for the tenth week in a row to 663 (a drop of 7 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since May 3, 2002 and is down more than 29% from its 2011 peak of 936, reached during mid-October.

The current natural gas rig count remains 59% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 875 active natural gas rigs.

Oil Rig Count: The oil rig count was up by 21 to 1,317. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year’s rig count of 839. It has recovered strongly from a low of 179 in June 2009, rising almost 7.4 times.

Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 was down by 3 from the previous week.

Rig Count by Type: The number of vertical drilling rigs fell by 21 to 576, while 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) was up by 32 at 1,408. In particular, horizontal rig units – that reached an all-time high of 1,185 in January this year – rose by 16 from last week’s level to 1,180.

To Conclude

As mentioned above, the natural gas rig count has been falling since the last few weeks, 271 rigs in fact (or 29%) from the recent highs of 934 in October 28.

Is this bullish for natural gas fundamentals? The answer is “no,” if we look at the U.S. production and the shift in rig composition.

With horizontal rig count – the technology responsible for the abundant gas drilling in domestic shale basins – currently close to its all-time high, output from these fields remains robust. As a result, gas inventories still remain at elevated levels – up some 45% from benchmark levels.

Hamstrung by this huge and sharply widening surplus, natural gas prices have dropped approximately 55% from 2011 peak of $4.92 per million Btu (MMBtu) in June to the current level of around $2.25 (referring to spot prices at the Henry Hub, the benchmark supply point in Louisiana). Incidentally, prices hit a 30-month low of $2.07 earlier this month.

To make matters worse, mild winter weather across most of the country has curbed natural gas demand for heating, indicating a grossly oversupplied market that continues to pressure commodity prices in the backdrop of sustained strong production.

This has forced several natural gas players to announce drilling/volume curtailments. Exploration and production outfits like Encana Corp. (NYSE: ECA) have all reduced their 2012 capital budget to minimize investments in development drilling.

On the other hand, Oklahoma-based Chesapeake Energy Corp. (NYSE: CHK) and rival explorer ConocoPhillips (NYSE: COP) have opted for production shut-ins to cope with the weak environment for natural gas that is likely to prevail during the year.

However, we feel these planned reductions will not be enough to balance out the massive natural gas supply/demand disparity and therefore we do not expect much upside in gas prices in the near term. In other words, there appears no reason to believe that the supply overhang will subside and natural gas will be out of the dumpster in 2012.

With natural gas unlikely to witness a durable rebound in prices from their multi-year plight and at the same time crude prices topping $100 a barrel, energy producers are boosting liquids exploration to take advantage of this trend. As a result of movement of rigs away from natural gas towards oil, the tally of liquids-directed rigs has climbed to a 25-year high.

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– Sharp offered 158 ENERGY STAR® qualified models in all seven product categories in 2011, including 30 LCD TV models.
– The 80″ class LC-80LE632U is the most energy-efficient flat-panel TV available today, as measured by power consumption per square inch. On average, it costs just $22 per year in electricity use to operate.
– Sharp televisions with unique Quattron™ Quad Pixel technology, are up to 55-percent more energy efficient than current energy-efficiency criteria under ENERGY STAR program requirements.
– Sharp promoted educational materials and programs for consumers, retailers and students.
– Sharp took a leadership role in CE industry to develop key ENERGY STAR program efficiency metrics.

This award recognizes Sharp’s ongoing commitment to promoting energy-efficiency amongst the consumer electronics and business products’ trade and consumers, as well as the company’s efforts to lead by example in the execution of its business operations. Each year, the U.S. EPA and the U.S. Department of Energy (DOE) honor organizations that have made outstanding contributions to protecting the environment through supporting and promoting energy-efficiency. Sharp will receive this award at a ceremony in Washington, D.C. on March 15, 2012.

Suntech’s monocyrystalline STP200S and STP195S – 24/Ad+ modules are an ideal choice for the residential sector due to their compact form factor of 62.2 x 31.8 x 1.4 inches (1580 x 808 x 35 mm). The improved module conversion efficiency of up to 15.7 percent ensures an even higher power output for each system owner. The modules also offer an industry leading weak light performance with an efficiency of 95.5 percent at 200/ msquared well above the industry standard.

The products also offer Suntech’s industry-leading 25-year power output warranty that warrants 6.7% more power than the standard industry warranty. In addition, the panels feature 0/+5% positive power tolerance and have been built to withstand all weather conditions, including 3.800 Pascal wind load and 5.400 Pascal snow loads, well above IEC standard requirements

Two key components of this initiative include the Lilly Research Awards Program and the Lilly Innovation Fellowship Awards. Through both, Lilly scientists will collaborate with academic researchers on projects that will aid in the advancement of Lilly’s pipeline for the future. These important programs will also further Lilly’s investment in research and development (R&D) in Europe, as well as in the United States.

Dr. Lundberg made these comments while in Brussels visiting Maire Geoghegan-Quinn, the European Commissioner for Research, Innovation and Science and John Dalli, the European Commissioner for Health and Consumer Policy. In addition to providing details about the Innovation Starts Here program, he highlighted that Lilly’s 2011 global investment in R&D was approximately $5.02 billion. Lilly has also doubled R&D investments in Europe over the past 10 years. Examples of some of Lilly’s R&D initiatives in Europe include:

Lilly has multiple clinical trials underway for new potential medicines across a number of unique areas.
Lilly participates in the Innovative Medicines Initiative, a public-private collaboration aiming to speed the development of new medicines for patients; Lilly has contributed to 11 projects with more in the pipeline.
Lilly established the Centre for Cognitive Neuroscience, an industry-academic consortium and post-doctoral fellowship program focused on increasing the probability of clinical success for potential medicines to treat conditions involving cognitive impairment, such as sleep disorders, Alzheimer’s disease and Parkinson’s disease.
Later this spring, Lilly plans to open a new building at its Erl Wood Research Center in the United Kingdom. Opened in 1967, Erl Wood was the company’s first R&D site outside the United States.

Innovation Fellowship Awards

Lilly’s new Innovation Fellowship Awards Program will foster post-doctoral career development through the selection of highly innovative research proposals. Lilly has created this program to broaden post-doctoral scientists’ training experiences and better prepare them for a broad range of careers, including in the pharmaceutical industry. The awards establish a pre-competitive academic-industry training partnership where a post-doctoral fellow and academic mentor are paired with a Lilly scientist to provide the industry resources that can enable the advancement of the post-doctoral scientists’ research proposal. In 2012, the Lilly Fellowship Award Program will be by invitation only to applicants at academic research centers in the United States and United Kingdom.

Research Awards Program

The Lilly Research Awards Program brings together a diverse group of scientists worldwide in an effort to further the advancement of research in important therapeutic areas where Lilly has expertise, including neuroscience, cancer, diabetes, immune system disorders and others.

The Lilly Research Awards Program was established in late 2011 to identify and support research and technology collaborations between Lilly scientists and external academic experts worldwide.

The collaborations established under the Lilly Research Awards Program are truly two-way, providing a pre-competitive environment in which scientists in academia gain invaluable access to tools to conduct basic research, and in turn, Lilly scientists receive critical information to help inform the future of drug discovery and development. By 2014, Lilly expects to support approximately 30 active projects a year. Examples of projects include development of new assays, validation of disease targets or biomarkers and improvement of preclinical models.

Three of the collaborative research projects selected for funding in 2011 under the Lilly Research Awards Program are:

Department of Neurobiology, University Hospital Copenhagen, Denmark : two-year program that will explore the potential expression and function of novel receptor variants in the brain to generate more robust findings regarding their roles in cognition, particularly as they relate to schizophrenia and Alzheimer’s disease, which could lead to the advancement of new molecules into clinical development.
Institute of Neuroscience, Alicante, Spain : two-year program that will advance the understanding of the neurobiology of schizophrenia in order to help manage cognitive impairment and treat negative symptoms of the disease.
Indiana University School of Medicine, Indianapolis: two-year program to study the roles played by distinct types of signals associated with chronic pain disorders with the long-term goal of discovering new treatments for neurological disorders and pain that deliver better patient outcomes. Indianapolis is the site of Lilly’s global corporate and R&D headquarters.

“This collaboration with Lilly allows us to take our research in this important area of cognition one step further in an effort to generate data that could help inform future clinical studies in schizophrenia and Alzheimer’s disease,” said Jens Mikkelsen, M.D., Ph.D., senior scientist at the Neurobiology Research Unit, Copenhagen University Hospital. “We look forward to working with Lilly in this innovative setting in which our findings have the potential to bring value and novel scientific findings to all parties involved, as well as the global drug discovery and development community.”

“We are excited this project was accepted and are eager to begin this important work that we believe has the potential to inform how we develop better medicines for treating neurological disorders and pain,” said Theodore Cummins, Ph.D., associate professor of pharmacology and toxicology, Indiana University School of Medicine. “Collaborations between industry and academia are critical in establishing new ways of conducting basic research, and we are very pleased to work with Lilly on this project.”

Currently, Lilly is visiting academic institutions worldwide to invite them to participate in the Lilly Research Awards Program.

The survey of 1,588 homeowners, conducted online by Harris Interactive on behalf of The Marble Institute, found that 76 percent of homeowners agree with the statement “Nothing beats the beauty and value of granite countertops” and 75 percent of homeowners who intend to remodel their kitchens in the next two years indicated they want granite countertops.

“The survey shows what our customers are telling us: No matter what the economy looks like, homeowners recognize that granite countertops enhance the value of their homes,” said G.K. Naquin of Stone Interiors in Loxley, Alabama, whose company sells granite and other countertops. “Consumers who are remodeling their kitchens see granite countertops as a safe investment in their homes. They prefer this natural stone to other materials because they understand it pays for itself in terms of higher resale value.”

When asked to rate which countertop material most enhances the value of their homes, homeowners favored granite by more than a three-to-one margin over the second choice: solid surface materials, such as Corian®. Synthetic or manufactured stone products, such as Silestone®, were rated a more distant third by the homeowners.

By overwhelming margins, homeowners agreed with the following statements about the natural stone:

• 93 percent said granite countertops are beautiful

• 91 percent said granite countertops are durable

• 89 percent said granite countertops are safe.

And 93 percent of homeowners who intend to remodel their kitchens in the next two years agreed that granite countertops are safe, reflecting the findings of several comprehensive scientific studies conducted during the past several years.

“Natural stone like granite has been used in homes for thousands of years, and now that new technology has reduced the cost of producing and shipping it around the world, more homeowners are embracing the beauty, durability and safety of granite countertops,” said Gary Distelhorst, CEO of the Marble Institute of America, which commissioned the survey. “Independent consumer surveys have consistently shown that Americans love the natural look of granite and value it above other countertop products.”

The study showed consistent support for granite across regions of the country. Homeowners with college degrees and higher incomes voiced a slightly higher preference for granite countertops. Seventy-four percent of college graduates and 75 percent of those with annual household incomes of $75,000 or greater indicated they want granite countertops for the next time they remodel their kitchens.

Homeowners with households of five people or more were especially supportive of granite. Eighty-seven percent of these respondents agreed with the statement “The next time I remodel my kitchen, I want granite countertops.”

This is the second national consumer survey to show consumers prefer granite. A 2008 study showed 55 percent of consumers wanted granite countertops in their dream kitchens. The survey was also conducted by Harris from Oct. 7?9, 2008 of 2,021 U.S. adults ages 18 years and older.

The 2012 study focused on homeowners. It was conducted online within the United States by Harris Interactive on behalf of Marble Institute of America from January 5?9, 2012 among 2,541 adults ages 18 and older, 1,588 of whom were homeowners.

For further facts and advice about natural stone or to find a qualified residential fabricator in your area, visit www.marble-institute.com.

“Owens Corning is excited about the possible to develop game-changing technologies that addresses house owner need for dependable, high-performance, inexpensive and sustainable roofing solutions,” stated Sheree Bargabos, president, Owens Corning Roofing. “We have already been monitoring photo voltaic roofing as a potential market exactly where we could offer value for our clients. This really is a distinctive opportunity to make the technology related for the broader market that might have already been interested but never considered it a feasible option due to price.”

Using the prospect of the DOE funding, there’s great chance to integrate Solexel’s technology into solar roofing options that are inexpensive, aesthetically stunning, and easy to install. Solexel’s technology leadership coupled with Owens Corning’s roofing market leadership presents the business with the opportunity to revolutionize residential roofing.

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The TripMaker® RVND™ functions more than 14 million points of interest – such as festivals, and National, State, and Regional Parks. Other key info includes:

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Rand McNally will be the most trusted source for maps, directions, and travel content. Rand McNally’s goods and services consist of: Interactive travel service, Tripology; America’s #1 Road Atlas; Award-winning IntelliRoute® truck routing software and GPS devices; TruckPC mobile communications solutions for the transportation industry; and the leading geography-based educational resources for the classroom. Consumers, companies, truckers, and educators depend upon Rand McNally to assist navigate today’s world. www.RandMcNally.com