RE:Production DeclinesProduction will Increase ... not decrease ( in the medium term ).
The rig count of course will decrease some and this is totally logical. The problem though is that a lot of countries have already stated that they are going to be producing more oil in 2015.
( Russia , Iraq , and the U.S..... just to name a few. ). This also is a logical thing to do as the world governments need the income to run their countries ... which has been stated many times in the News .
With the " capped off wells " all over the continent there is no shortage whatsoever of oil and gas and won't be for awhile yet. So even though the drilling rigs will decrease along with the decrease in the oil price the world countries will just pump out more oil to try and make up the difference. There are lots of countries that can still make a decent profit at these prices .
In North America alone ( as seen below ) there are areas that are profitable at these prices right now.
And there are other countries around the world that can produce a lot cheaper than North America. Thus if they really are serious about wiping out the U.S. oil surplus then they may have to keep the oil price down for an extended period and very possibly at even lower oil prices.
We will see over the next 6 months or so how serious they really are.
A big question: Will low oil prices kill the US shale boom?
The catch is that no one quite knows how low prices need to go to rein in the US oil boom. Analysts often focus on a metric called the "breakeven price" for oil-drilling projects. Here, for instance, is ScotiaBank's estimates of the breakeven price for various US shale and Canadian oil sands projects:
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(ScotiaBank)
If oil stays below $60 per barrel, some US companies will cancel or scale back shale drilling (a number of big companies are already pulling out of Texas' Permian Basin for now). But other drillers may try to cut their costs, grit it out, and keep drilling. It really varies from company to company. That makes it very hard to predict how this all shakes out — or where global oil prices will bottom out.
The US Energy Information Administration still expects that overall US oil production will grow another 700,000 barrels per day in 2015 — though that's slightly lower than the prediction when prices were high.