How Oil & Gas Rig Counts Impact Consumer Confidence And Energy Prices
What is Rig Count?
A Rig Count is an official listing of all the oil and gas rigs that are operational at a certain location. In addition to the location and operational status of each Rig, the count provides insight into the number of offshore and onshore active drilling rigs.
The most widely used national Rig count report is published on a weekly basis as Baker Hughes Rig Count. This report tracks the location and activities of all active drilling rigs throughout the United States and Canada. As oil and gas commodity prices fluctuate, the number of active rigs either declines or increases. To achieve a commercial well, normally a specific range of commodity prices must be stable so the well can be commercially drilled in a specific oil basin and formation. A well determined to be commercial, drilled in the Permian Basin may require a higher stable commodity price than an analogous well drilled in the Delaware Julesburg basin, due to the difference in the cost of drilling each well.
This year, dramatic declines in the active Rig count have occurred due to the impact of Covid-19 on oil and gas demand and the resulting national shut down of many businesses. Supply and demand charts depict seemingly wild trends of supply. For the future, Rig count fluctuations appear to stabilize with a market reset during 2021 and beyond.
Rig counts increased during the fourth quarter throughout the United States and Canada, as drilling activities correlate to the increase in oil and gas commodity prices.
What does all of this mean to the energy investors?
Now is the time for implementing the wise old strategy to “Buy Low, Sell High” by directly participating in an oil and gas investment as a component of your investment portfolio.