Efficiencies Cause Oil Production to Increase With Fewer Rigs but Rig Counts Still Rise

Oil and gas companies use rig counts as a yardstick to measure outlook in the industry. An oilfield services company, Baker Hughes, provides the weekly rig counts. This count began in 1944, and it continues to be a valuable tool for analyzing trends and evaluating the activity of the industry. Exploration and development spending by oil companies are the basis for the report, and this spending is motivated by the prices of oil and natural gas and expectations for future prices. The number of rigs is indicative of the confidence that oil and gas producers may have about current drilling conditions. The counts are also used to determine activity levels of companies that provide oilfield services, since the number depends on the current and forecasted demand large oil producers provide for drilling, completion and other energy services. Increased drilling efficiencies such as pad drilling, which involves drilling multiple wells on a single site, reduce the number of rigs necessary. This
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