Privately held producers had 711 rigs at work in the U.S. in mid-March, representing some 40% of the total U.S. rig count, according to analysis by the oil-service research team at Tudor, Pickering, Holt & Co. Securities Inc.

“Private E&Ps have been a quiet pillar of strength for U.S. gas-directed rig-count activity,” the group reports. Of their 711 rigs under contract, 524 were targeting gas, up 9% from mid-March 2007. Publicly held producers, majors and utility-owned operators have 4% fewer rigs at work this year, totaling 865 rigs.

“The private E&Ps quietly have grown from 35% to 38% of the gas-directed rig count over the last 12 months.”

The research team views private producers’ drilling as an important swing factor. “This group of E&P operators tends to move capex budgets up or down based on realized cash flows.?Given a $10-plus natural gas 12-month strip in the last several weeks, we’re scrubbing private E&P rig-count data with a fine-toothed comb for evidence of increasing oil-service customer optimism.”?

The analysis is based on Smith Bits’ rig count, and a Tudor Pickering Holt classification system. “It’s easy to see how increased bullishness or nervousness among private companies can meaningfully impact the supply/demand equation across most oilfield-services and -equipment lines.”

Private producers may affect the rig count for oil targets even more. “Private E&Ps collectively have 180 rigs currently drilling for oil—50% of the total 363 U.S. oil-directed rig count.”

This 180 is up 22% from year-end 2007, suggesting that $100 oil is resulting in new drilling for oil. This would result in greater demand for artificial-lift services, such as from Weatherford International and Lufkin Industries, and well-service and workover-rig services, such as from Key Energy Services and Basic Energy Services.

Some 46% of rigs at work for private producers are in five basins: Anadarko (83 rigs), Appalachian (74), Permian (74), the Texas Gulf Coast (51) and East Texas (45).?Targets are mostly gas in each basin, except the Permian, where roughly half of the rigs are drilling for gas and half for oil.

Also noteworthy is private producers’ rig counts on the Texas Gulf Coast where targets are deep, directional and fairly inexpensive, the research team reports. “Private E&Ps constitute some 60% of the region’s total rig count.”?

The activity is down 7% year over year. “If we see private E&P activity rebound in this region, we think it will be a pretty good indicator that checkbook drillers are more bullish on natural gas.”