How Are Crude Oil Prices And Global Oil Rig Count Correlated?
Crude oil prices and global oil rig count are positively correlated with a correlation of almost 90%. As crude oil prices fall, the price realizations for oil and gas producing companies decline. As a result, these companies are forced to pull back their production, implying that they hold back their capital budget for exploration and production. This leads to a sharp drop in the demand for oil rigs worldwide, resulting in a fall in the global rig count. In the table below, we show how the plummeting crude oil prices over the last 20-21 months has caused a steep decline in the global oil rig count (US & International).
Have more questions about Chesapeake Energy (NYSE:CHK)? See the links below:
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Chesapeake Energy
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