RE:RE:RE:RE:RE:RE:RE:Oil rig count (2015, 8 May)Oil price is ruled by the same old basics of supply/demand. Rigs are used to find and extract oil, which plays on the supply side. If you don't have a rig first, you won't have oil next, period.
The oil price collapse came from the oversupply created by the US from a recent boom in shale oil fields. These fields are of rapid decline rate and have to be replaced quickly to maintain output. They cost roughly $60 - $70 a berrel.
RIG COUNTS DATA
Dec 2013 Nov 2014 Last report
US 1771 1925 894
Canada 372 421 75
There as been an unprecedent fast decline of rigs in service in only 5 months: -54% US and -82% Canada. The effect on the supply side has a delay because the actual fast declining shale oil fields were still flowing but they are depleting. The absence of rigs on the ground to replace the depleting fields started to show up in inventories since the begining of the year: the weekly inventories were +7M berrels in december, they slowed to about +3M in march, then to +2M and now we have a decline of -3.9M and this is not caused by a surprise economic/demand boom. And these oil fields aren't put beck online overnight...
A higher oil price will surely help the IAE share: first, from a wind turning back in the oil patch. Second, the heding will roughly cover only the first year of Stella, the other part of the production not covered will make a notable difference on the cash flow with a higher oil price. And with oil probably back up to $80+ in 2016 from $50, we have a significant effect with a $30 cost per berrel...
all imho...
https://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview
https://www.eia.gov/petroleum/supply/weekly/
https://www.cnbc.com/id/102518977