How Will The Global Rig Count Move As The Commodity Prices Recover?

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Depressed commodity prices over the last two years have resulted in a sharp fall in the demand for exploration and drilling by oil and gas companies. This sluggish demand has, in turn, led to a steep decline in the demand for drilling rigs across the globe, which has severely impacted the revenues and profitability of oilfield services companies. In our previous analyses – How Are Crude Oil Prices And Global Oil Rig Count Correlated? and How Are Natural Gas Prices And The Global Gas Rig Count Correlated? – we had discussed how the global oil and gas rig count is highly correlated to the price of these commodities. In this article, we show how the global rig count performed in this commodity trough and how we expect it to move in the next few years.

Over the last two years, crude oil prices have dropped from an all-time high of around $110 per barrel in 2014, to under $30 per barrel in February of this year. This has led to weak price realizations for oil and gas companies, forcing them to cut down on their exploration and drilling activities. As a result, the global rig count fell from over 4,600 units in 2014 to close to 2,300 units at present. The worst hit region has been North America, which has seen the maximum drop in its rig count over the last two years. The North American rig count fell from 2,241 units in 2014 to less than 600 units year-to-date, representing a decline of almost 75% over the last two years.


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However, as the oil prices have recovered from under $30 per barrel to $45-$50 per barrel in the last few months due to oil production disruptions in Canada, Venezuela, Nigeria, and Ghana. Consequently, the markets have seen a notable improvement in the rig count over the last quarter. The North American rig count (oil and gas) has grown by more than 35% over the last four months, though the international rig count continues to remain weak.

Based on our forecast for crude oil prices and the current market trends, we expect the 2016 global rig count to be lower compared to 2015, due to the depressed drilling activity during the year. However, we expect the commodity markets to recover gradually, and oil prices to reach to around $90 per barrel by 2023. Accordingly, we have estimated the global rig count in the table below. Since the North American markets were the worst hit by the commodity downturn, we forecast these markets to be the first one to rebound from the oil slump. Thus, the North American rig count will recover at a faster pace than the international markets over the next few years.


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1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Baker Hughes

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