...Prices, Rig Counts Down: The U.S. rig count has declined 20% to 1,543 as of Jan. 30, 2015, from a recent peak of 1,931 reached in September 2014. The price of West Texas Intermediate (WTI) crude and Henry Hub natural gas have dropped roughly 50% and 35%, respectively, during this period. Nearly all of these rig count declines are related to onshore activity. Seasonal Effects Modest: The seasonal impact on rig counts has been less pronounced since the shale revolution commenced. Seasonal effects have reduced by roughly 50%, with recent declines averaging up to 2%. The main reasons for this moderation are improvements in rig technology and the manufacturing characteristics of shale production. Rig Counts Mirror Prices: Through-the-cycle price and rig count declines have tended to mirror one another in the bear markets since 1985. This suggests rig counts could see considerably more reductions before stabilizing. Price Recovery Shape Matters: Trough-to-previous peak rig response in the most...
