Half of the recent increase in the U.S. rig count from its April 1999 low can be attributed to drilling activity in just six counties-and all are geared toward natural gas. Freestone and Panola counties in East Texas are the site of the hot Bossier natural gas play led by Anadarko Petroleum Corp. Sublette County, Wyo., is where operators pursue the coalbed methane play and expansion of Jonah Field. And Eddy, Lea and Rio Arriba counties in southeastern New Mexico are part of the Permian Basin. Each of these counties features drilling primarily for natural gas. This is according to a new report from Petrie Parkman & Co. analyst Andrew Logan, who is based in the oil and gas investment banking firm's Denver office. He analyzed rig data from two key sources: Baker Hughes Inc., which tallies rigs actually making hole, and Smith International Inc., which tallies rigs moving onto location (rigging up) as well as rigs that are drilling. Smith's numbers tend to be higher than those of Baker Hughes, yet both companies give a good approximation of overall drilling trends. "Gas drilling activity is 161 rigs, or 26%, ahead of its previous high, which was achieved for the week ended November 28, 1997," said Logan. On the other hand, the oil rig count is still 289 rigs, or 54%, below the peak reached in 1997." Following a review of data extending back to 1996, Logan found that for the week ended September 1, 2000, land-based rigs in five states, plus those drilling offshore in state and federal waters, accounted for 85% of the total rig count today. Of the 161-rig gain from 1997's low, 48 rigs were gained in New Mexico. The count onshore Texas, with 311 rigs running, has more than doubled from the 1997 low-but is still only 36 rigs ahead of the 1997 peak. Oklahoma, Louisiana and Wyoming round out the top five states with the biggest number of rigs drilling. In a separate report, Mark S. Urness, who follows drilling contractors for Salomon Smith Barney in New York, reported that total U.S. oil and gas drilling permits declined by 188 during August on an adjusted basis. Urness, who tracks drilling permits in 29 states each month, said that 2,826 were issued in August, 4% less than the 2,944 that were issued in July. But July's total represented an 11.5% increase from June's 2,641, he continued. Moreover, August's figure was 16.6% higher than the 2,424 that were issued in August 1999. "Recent sequential and year-over-year changes suggest an increase in drilling activity in the coming months," Urness said. -Leslie Haines and Nick Snow