The Petram Group Releases its 2020 Drilling Activity & Oil Price Analysis: Oil Price Impact on Drilling Activity

DENVER, Aug. 14, 2019 /PRNewswire-PRWeb/ -- The Petram Group, a Denver-based company specializing in mineral rights, has released its findings on its study of the impact of oil prices on drilling activity.

To determine if there is a relationship between oil prices and drilling activity, a simple statistical analysis called the correlation coefficient can be deployed. The correlation coefficient represents the strength of the statistical relationship between two variables; in this case oil price and drilling activity. The coefficient can range from between -1 and +1. A +/-1 correlation means there is a perfect relationship between variables, while a 0 coefficient means there is no measurable relationship.

The correlation coefficient between oil prices and drilling activity is 0.84. This is a high coefficient and means there is a near-linear relationship between oil price and rig activity; in other words, as oil prices go up or down, drilling activity follows suit.

Both oil price and the number of active drilling rigs have fallen substantially over the last 5 years. Oil price has fallen over 40% from its peak and the number of active rigs in the United States has fallen even more drastically, from a peak of over 2,000 to a current count of 934. This represents over a 50% decrease in active rigs.

While oil prices and activity have rebounded, or at least stabilized, over the last two years, we are still very far from the levels of oil price and drilling activity of 5 years ago. It is The Petram Group's view that oil prices will continue to trend towards its historical inflation adjusted price of $54.33, as discussed in this report. This means drilling activity will likely stay flat, or slightly decrease in the future, as well.

The Petram Group is a mineral rights acquisition company with decades of combined experience in the acquisition and management of oil and gas properties. As an end-buyer, The Petram Group is usually able to offer more for oil and gas assets than other companies within its areas of interest. The Company prides itself on transparency and its ability to help landowners maximize the value of their mineral rights or other oil and gas interests.

If you would like more information about this topic, or to discuss your oil and gas asset, please contact The Petram Group at contact(at)thepetramgroup(dot)com. If you'd like to learn more about mineral rights, visit The Petram Group blog.

SOURCE The Petram Group