I love stuff like this. Rig counts are typically viewed as the holy grail indicator for drilling activity. However, they do not take into account future activity and are wholly backward-looking indicators. Isn’t it more important to try and get a handle on what is coming down the road?
Think about it. Before a rig is placed into service, a crew must be hired to run it. Even if a rig is taken out of commission and moved (can take 2-10 days depending on the type of rig) while the rig count will drop as it is no longer active, the entire crew is not laid off. Using employment in conjunction with rig counts as Davidson does below I think gives us a better indicator of both current a future activity.
“Davidson” submits:
I wanted an indicator which captured activity in oil and gas which the rig count was missing due to the efficiencies which tend to depress the rig count. I went to employment in the space and combined this with Oil and Nat Gas Production Indices. I simply added those three indicators and divided by 2 to keep it all on one chart.
I think this is better than the Baker Hughes Rig Count which shows a decline currently while activity is known to be in a clear uptrend.
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