The drill rig count in the shale era just doesn’t mean what it used to during the days of traditionally drilling. In the old days, cutting rigs immediately meant less new oil would be produced than the year before, but not anymore.
Consider the basic formula implied by the rig count:
Number of new wells drilled per year = Rig Count * average number of days to drill a well / 365
New oil production = Number of new wells * the average production of the new wells.
But in 2011, the average time for Anadarko to drill an Eagle Ford was 12 days, by the end of 2013, the average was 8 days with the record setting well only requiring 4.5 days. In 2015, it is reasonable to assume that the drilling time will be half of 2011’s rate, so only half as many rigs are required in 2015 as 2011. Furthermore, the average oil production from new wells in the Bakken and Permian according to EIA data has doubled in the last 5 years (Bakken) and 3 years (Permian). Everything else being equal, you’ll need half as many rigs with a doubling of production.
Combine these two observations and a 2015 rig drilling in shale is 4 times as productive as a 2011 rig. Of course, that’s an oversimplification since no rig stays busy 100% of the time. But at the same time, I imagine the remaining rigs are running with the best crews on the best locations, so don’t be surprised if a drop in the rig count doesn’t result in a dramatic decline in production. Its not your father’s rig count anymore.
No Called Strikes 
Do you have any insight into how much shale technology is progressing?
In terms of individual wells, the trend has been that well productivity has gone up a lot due to:
– Longer laterals. (I believe longer laterals take more time to drill than short laterals.)
– More stages of hydraulic fracturing.
– Better understanding of geology
– Better fracturing techniques? e.g. better mixtures of chemicals and proppants sent into the well
– Other advances in technology?
Offset by:
– People drill the most economic/best wells first
A better metric would be the new mcfe coming out of the ground. I think you can look at aggregated production data (from each state) and see how productive each year’s vintage of wells are.
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I agree watching mcfe coming out of the ground from new wells would be a better metric than rig count.
It would also be interesting to know the total lateral footage drilled in a given year. My guess is that the total lateral footage hasn’t gone down even with the total number of rigs declining. Similarly the number of stages of fracs has probably increased 5-6 fold and easily compensates for having less than half the number of rigs running.
Recovery rates for shale reservoirs a few years ago was pathetic – something in the 5-10% range. Getting recoveries to 10-15% through better fracking opens up a lot of possibilities.
On the flip side, it takes a lot of energy to move all that sand and fluid down a 3 mile long hole, so there is a limit to how much more efficient shale wells can get, but I don’t think we are close to the limit yet.
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