Economist: Texas rig count ‘blood bath’ on the horizon
Oil economist Karr Ingham said Monday that Texas could lose more than 600 rigs as the drilling downturn deepens amid low prices and weak demand.
Ingham, who puts together the monthly Texas Petro Index, told Fuel Fix that Texas could cut over 600 additional rigs in the coming months, a drop off similar in scale to the one seen in 2008 and 2009.
“I think people haven’t quite gotten a grip on what’s possible,” Ingham said.
The number of rigs operating in Texas fell 22 percent over last month from 895 to 695 as of this week.
With no end in sight to weak prices and a global supply glut Ingham expects the rig count will continue to tumble.
“We’ll likely lose 60 to 65 percent of the rigs. If I turn out to be dead wrong about this, it will suit me just fine,” Ingham said.
Over 50,000 upstream jobs could be on the line if prices do not rebound soon.
Companies across the production chain have already begun reducing headcounts as they brace for a prolonged period of weak prices.
Last month, services giant Baker Hughes announced 7,000 job cuts, joining the growing list of companies that includes Royal Dutch Shell and ConocoPhillips who have been forced to trim staff as oil hovers around six year lows.
“It will be a bloodbath in the short-term, but it’s cyclical,” Ingham added.