In addition to the often-cited strong relationship between WTI crude prices and the US land rig count, there is a similar robust correlation between operator capex and the land rig count, according to the latest issue of RigData’s RADAR Report. 

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The RigData News & Analysis (RDNA) team isolated 34 public operators that together control about half of all active US land rigs and that collectively spent $132.2 billion in 2014 mainly on US land E&D. With the 2016 futures strip pointing to a decline of -55% in WTI vs. 2014, capex for this group of operators is projected to drop by -57% in the same comparison.

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The RDNA team projects that the sampled operators will slash capex by -35% YOY in 2016 to $52.5 billion just to sustain a largely flat rig count.