Rig Count - May 1

dan_s · Post by **dan_s** » Fri May 01, 2015 2:47 pm

The North American active rig count continues to fall, down by another 27 this week. The number of rigs drilling for oil in the United States has dropped from 1,609 in early October, 2014 to 679 today. I now believe the number of rigs drilling for oil will drop below 500 by the end of June.

The overall North American active rig count (984 today) is now expected to dip close to 700.

The number of rigs drilling for natural gas is down from over 400 to 222 in less than six months.

THIS IS VERY IMPORTANT TO UNDERSTAND: EVEN IF OIL AND GAS PRICES DO REBOUND, THE NUMBER OF ACTIVE RIGS WILL NOT GO BACK UP UNTIL mid-2016 AT THE EARLIEST. During the previous oil price cycle (2008 to 2010) the rig count continued to fall in 2009 even though prices were ramping back up to the trend line. The rig count did not go up until early 2010. Therefore, Drilling & Completion costs are likely to remain low (favorable for upstream companies) through 2016.