Do Rig Counts Tell Us Everything We Need to Know?

Rig counts are key statistics to indicate activity levels in the upstream oil & gas sector. And, it has plunged thanks to the unfortunate confluence of the O&G Recession and the Great Pandemic Recession. The following Table lays out the severity of the rollbacks across the industry. And, Reeves County and the Delaware Basin were not spared.

As much as these statistics imply a race to zero, the story is much more complex. For example, permits to drill wells, although down 50% from 2019, are still well in excess of 2016. This is a sign that the commitment to the region is long-lasting. Ditto to the news of Chevron’s planned acquisition of Noble Energy, a leading driller in the Pecos/Delaware Region. Indeed, Noble, crippled by a heavy debt load, was like a wounded animal. And Chevron, large and financially muscular, was easily able to “devour” it. That means the new owner/developer of this world-class acreage will be able to be much more aggressive than the crippled predecessor.

“Bottom Line” is that permit levels are decent and Chevron’s takeover is a shot of adrenaline for the Pecos economy.