U.S. Rig Count Could Collapse By 65%

Due to the combined global effect of the Covid-19 pandemic and the ongoing oil price war, the American oil and gas industry is stepping heavily on the brake pedal and is reducing drilling at record speed, Rystad Energy research shows, putting the horizontal oil rig count on track to fall by about 65% from mid-March levels. The rig count is widely considered to be one of the most important indicators of investment appetite by E&Ps. It not only represents the actual drilling activity in the market but is also a key metric of consumer confidence, closely related to price developments. From a peak of about 620 rigs in mid-March 2020, the oil rig count is forecast to free-fall to a potential bottom of around 200, Rystad Energy estimates, interpreting updated guidance from exploration and production (E&P) companies. Most of the anticipated decline will come already by the end of April. The horizontal rig count has so far dropped to roughly 500, falling by 19% from the recent apogee just three weeks ago. “The speed of this decline exceeds the initial post-oil-price-crash expectations. This is for sure a much faster industry reaction than during the previous US land rig down cycles, and we will likely see continuous downward adjustments of similar magnitude throughout the next couple of months,” says Rystad Energy’s Head of Shale Research Artem Abramov...MORE