I woke up this morning curious about the current rig count. Maybe instead of counting sheep last night, I was counting rigs.
The American Oil & Gas Reporter website advises, based upon data made available by Baker Hughes, that 787 rigs are active as of October 23, 2015. For the first time since August 2015, this number represents no change in the rig count from the prior week.
This same time last year, 1,927 was the total rig count (as of October 24, 2014).
That is a difference of 1,140 rigs in the span of only one year – a much more drastic reduction than I had realized.
I dug a little deeper, and discovered that at this same time in 2011, the count was 2,021 (as of October 28, 2011). That is a difference of 1,234 rigs in only four years.
What does the domestic rig count mean? Earlier this spring, we posted a blog discussing the meaning of the U.S. rig count in layman's terms. We noted that the U.S. rig count is used as an indicator for the amount of overall domestic oil and gas activity. It is used as part of a predictive model. Historically, it is used as not only an indicator of the ability and likelihood of an increase in future production in the United States, but also as an indicator of the oil and gas sector as a whole.
So what does the current rig count of 787 mean? Clearly it means overall domestic oil and gas activity has radically changed in the span of one year. Beyond that, it is difficult to predict how this number truly indicates future domestic production in light of oil prices and the current oil market.
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