Musings: Falling Rig Count Gives Hope For Oil Industry Recovery

Between November 26, 2014, and last week, the industry lost rigs drilling 59 directional wells, 283 horizontal wells and 119 vertical wells. On a percentage basis, the declines were 30.4%, 20.6% and 33.8%, respectively. What we take away from these figures is that we are on the cusp of the decline in oil production growth. Vertical rigs are often used to deep the top section of horizontal wells with the main portion drilled by larger rigs (horizontal). Efforts to improve drilling efficiencies and lower well costs have led to this rig specialization. The recent pattern in the rig declines suggests that pad drilling is only beginning to be impacted, which is good news for the optimists who believe this will be a short industry downturn.

So far, the industry has laid down 461 rigs since Thanksgiving Day week. Oil rigs will continue to fall until the industry has shut down enough rigs to truly impact oil production growth, and unfortunately that may take a while. We would not be surprised to see another 300+ rigs shut down before production starts to slow. We will continue to watch the nature of the wells being drilled. We also need to examine where the rigs are falling to further gauge how fast oil production may fall and oil prices respond.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Terry  |  February 12, 2015
Unfortunately, the US government IS awake. It is just that the Obama administration is doing everything it can to destroy the domestic US oil & gas industry, and to undermine American energy security internationally. But, thats what we citizens get for failure to elect an AMERICAN as President!
Doug  |  February 10, 2015
Why is the United States allowing Saudi Arabia or OPEC or any one else decide how much oil is going to be imported in and at what cost? It is proven that the U.S. now can be totally self supportive in regard to OIl and oil Exploration. Why do we not put a Tax on imported oil to meet the cost of production and exploration here in the United States? Once again literally Thousands of Americans are going to be out of work because we allowed Foreign Oil prices to rule what happens here in the United States. Can someone explain to me how prices can fall so drastically in just a couple of months and yet take years to recover? This makes no sense to me either. I have been through 3 of these Boom and Bust things in my 35 years in the OIl and Gas fields, and I for one am tired of it. No other industries market explodes and dies like this one. What does it take to get our government officials to wake up?


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