16th January 2015
GCA’s U.S. Oil & Gas Monitor shows the largest week on week drop for 6 years. The Baker Hughes rig count noted a fall of 74 in the U.S. onshore rig count, with this now having declined by 254 from a year high of 1,876 in November 2014 to 1,622 on 16 January 2015.
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This places the index for U.S. onshore rigs at 90, 14% down on the 2014 high compared to 94 (10% down) the previous week. The index for the Brent oil price improved one point to 46 during the week. (Indices are based on an index of 100, representing in each case the average for Q2 2014.)
The rig count and indices for the GOM remained flat during the week.
If the trend seen in 2008-2009 following the financial crisis is any sort of benchmark for what is to follow, the continuing decline is likely to be very sharp indeed. The light gray lines on the chart show the trajectory that a decline in 2015 would follow, ranging from being the same downward trend seen in 2015 (the steepest decline), to 75% or 50% of that level of decline (the two other gray lines shown).
This trend can also be seen clearly if oil price and rig count indices from 1 July 2008 to 31 December 2009 are plotted on the same scale range as the current oil price and rig count indices. The current oil price fall has been slightly shallower than in 2008, although it is by no means clear it has reached bottom. The rig count index has started to track down that seen in 2008-2009, similarly displaced 5-6 months from the decline in oil price.
Looking more specifically at the major onshore basins where unconventional (tight and shale) oil are being developed (Permian, Eagle Ford and Williston Basin) which together represent 60% of the oil-targeted activity, the drop has been even more marked than overall change, being on average 15% to 20% off 2014 highs.
The rig count in these basins is down 30 in the week, with the indices now ranging from 83 (Eagle Ford) to 90 (Williston). The average for all three combined is 88, a drop of 3 points in the week.
 Indices are based on an index of 100, representing in each case the average for Q2 2014.
 Baseline for the Brent oil price is US$ 141.07, and for the rig count is the average for Q2 2008.
 The index base has been changed slightly from that used in the 9 January 2015 release, in order to conform to the approach used for the total onshore and GOM rig count.
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