Do Rig Counts Tell Us Everything We Need to Know? – Part 5 October 12, 2021
Oil industry business cycles are unavoidable – but, no two are alike. However, this recovery, way slower than the rate of recovery in oil prices, has stalled. Look at this graph of rig counts for Reeves County and the Delaware since early ’20. Compared to all other recoveries, when the price of oil rebounds as sharply as indicated in this graph, the drilling rig counts would also zoom up. This is an outlier situation.
But drilling permits are starting to (finally!) show real signs of a recovery. This is the first genuine signal that the operators are responding to oil prices that are irresistibly high!
The bottom line is that permits are an irrefutable leading indicator of operating activity. The ramp-up may be just around the corner. However, the stock of small and medium-sized industrial/warehouse buildings (under 10,000 sf) in Pecos is very limited; but First Keystone has them to rent or for sale. Act now to avoid the coming bottleneck!