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It's Different This Time... Rig-Count Edition
In July 2008, crude oil prices peaked and began to fall quickly. After 2 months they had dropped 30%, but being the smartest extrapolators in the room, producers piled on the rig count driving it higher and higher until around 5 months after oil prices peaked... the rig count completely collapsed. Today, it has now been almost 6 months since oil peaked and began its accelerating free-fall and rig counts have just started to drop (still 2% above the June peak oil levels)...
There is always a lag... and with permits down 40%, let's just see if it's different this time...
Of course, it's different this time... it's way worse! All these rigs are backed by massive debt loads at drastically lower costs of funding than is possible now... but we should ignore that, right?
Charts: Bloomberg
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This is it this time. It's going down. All of it. I feel it in my bones. Wait for tomorrow's open. Carnage. I fucking know it.
I hope it doesn't kick off big style. I'm off work and I wanted a front row seat watching the billions disappear.
Fed on line one, they want you to Cntl P oil
The Fed will just monetize the rigs and nothing will happen.
Damn it! I just moved everything I own out of those crappy Greek bonds into Japanese bonds and those tank.
So today I moved everything into the oil services industry to recover my losses becaue there should be a huge demand for cheap oil, right?
Now you're telling me rig counts are going to plummet? Damn you and these stock tips, Tyler. I've lost dozens of dollars so far.
I should have used my head today and shorted the gold and VIX bubbles on margin instead. That's how the real pros make some serious ching.
I thought that going into the 4th quarter of 2013. Stuff I follow was pulling back noticably and it looked like recession was imminent. 1st quarter this year printed -3.9% on GDP and I thought "nailed it!"
And then the market turned around and proceeded not to care. A straight "up and to the right" graph like it never happened and didn't matter. We printed up 3% in the 2nd quarter and the 1st quarter was revised to -3.1% or thereabouts... and that's all she wrote for my well-considered and deeply held recession call.
Good luck on your call. You'll need it.
One of these times it won't be a drill. This isn't the time. Europe and Russia have to play out... not yet but soon. If your short tighten your stops. The juicer is comming.
You might consider taking the popcorn out of the microwave, cause it ain't going down....Not tomorrow, not next week, not next year. It will all be green by Friday.
Nope, 4Q 2015 shit will be so real you won't know which way is up.
June 5th, 2015 - you saw it here first.
It's still too early. Other geos go down before the US does, causing USD to surge, then we crash. It won't be all of it, so it's not the big one.
I do think we're at the begining of the end, though. This upcoming crash is the first domino to trigger the fall of many in the coming year or two.
The classic and all too predictable "flight to safety".
Maybe this time, for it to really crash, there is nowhere safe. USSA crashes first.
I'm feeling it in my bones, too. Don't know about tomorrow, but I don't think it's years down the road anymore.
My bet's right before Christmas; some amazing conjunctions in store, not seen since September 2008. Good luck.
Whats different this time? A few hundred barrels per day in production per well? The good wells being drilled back then were producing less than 100 barrels per day. A good well today exceeds 1000 barrels per day.
A contemporary well costs dramatically more than those wells of 2008, and the depletion curves are far steeper. Costs have escalated just as fast as oil prices, with debt being used to fill in the gap. Collapse in the debt, and the future willingness of financiers to lend to the sector will ensure that much higher oil prices will be in store for the future.
It takes deep pockets to STAY in the oil business. Any chance that this time, it will just take out a bunch of the smaller companies/wildcatters, then to be swallowed up by the TBTF oil companies? It would follow the banking model.
Just a thought before my morning coffee, just a thought...
delete
Haven't heard much from Flakmeister recently. He was always convinced that the world was going to run out of oil NEXT WEEK. So possibly he might have lost his shirt when oil collapsed.
We might run out for awhile if all the rigs are shut down
Bailouts for Big Oil?
I asked this months ago.
How much QE went to E&P?
i think about 70-80%
Tyler Durden, you keep saying that the markets will crash? Well, every time you post bad news they just go back up! When will it crash for real? When can I start selling ES contracts? Thanks.
read up on German hyperinfation. Stocks never really crashed. Just the currency did. Look behind you...
or venuzula or zimbabwe....they just go up and up ....get ready for your $50 steak and your $25 latte at starbucks.
Tyler, you mean we're NOT GOING TO HAVE CHRISTMAS?????
I think that chart is perfectly times...as rigs are shuttting by the dozen...right now
Yes ignore it. If we all stick our heads up our asses we will be a lot better off.
I should be ya know like a Presidential speech writer.
My relatives in Russia tell me benzene (gas) prices are going up right now, not down.
Tsk-tsk...haven't those folks heard of the free market?
.
to go away and stop calling.
Shale companies such as OAS have already come out and said they are reducing their rigs from 16 to 6 if my memory serves. This is what is supposed to happen when oil gets cheap after all. Also, most had to hedge the oil price in order to borrow the money in the first place. So the high yield bond market in some specific cases will be way oversold. Not saying that some debt's not going to be in trouble.
Do oil transports wandering around the oceans count in the BDI?
“The Americans will always do the right thing… after they’ve exhausted all the alternatives.”
Winston Churchill
Assuming the chart data is accurate, we could lose 2/3 of the rigs and *STILL* have more than there were in 2008.