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A time series analysis of oil production, rig count and crude oil price: Evidence from six U.S. oil producing regions

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  • Apergis, Nicholas
  • Ewing, Bradley T.
  • Payne, James E.

Abstract

With oil company valuations tied in part to oil well drilling to replace reserves at a rate that exceeds production, understanding the dynamic relationship between the development of oil rigs and oil production is important. This study focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, and Permian regions, historically the six major oil producing regions in the U.S. Specifically, we apply time series econometric techniques of unit root, cointegration, and error correction modeling to examine the dynamic relationship among oil production, rig count, and crude oil prices for each of these six U.S. oil producing regions. The results of this study highlight the importance of identifying the regional variations in oil production, rig count, and crude oil prices and their interactions in both the valuation of oil firms and capital investment projects as it pertains to oil drilling activity.

Suggested Citation

  • Apergis, Nicholas & Ewing, Bradley T. & Payne, James E., 2016. "A time series analysis of oil production, rig count and crude oil price: Evidence from six U.S. oil producing regions," Energy, Elsevier, vol. 97(C), pages 339-349.
    • Handle: RePEc:eee:energy:v:97:y:2016:i:c:p:339-349
    DOI: 10.1016/j.energy.2015.12.028
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    2. Comincioli, Nicola & Hagspiel, Verena & Kort, Peter M. & Menoncin, Francesco & Miniaci, Raffaele & Vergalli, Sergio, 2021. "Mothballing in a Duopoly: Evidence from a (Shale) Oil Market," Energy Economics, Elsevier, vol. 104(C).
    3. Apergis, Nicholas & Ewing, Bradley T. & Payne, James E., 2021. "The asymmetric relationship of oil prices and production on drilling rig trajectory," Resources Policy, Elsevier, vol. 71(C).
    4. Shakya, Shishir & Li, Bingxin & Etienne, Xiaoli, 2022. "Shale revolution, oil and gas prices, and drilling activities in the United States," Energy Economics, Elsevier, vol. 108(C).
    5. Jiang, Meihui & An, Haizhong & Jia, Xiaoliang & Sun, Xiaoqi, 2017. "The influence of global benchmark oil prices on the regional oil spot market in multi-period evolution," Energy, Elsevier, vol. 118(C), pages 742-752.
    6. Joshua Lozano & Joonghyeok Heo & Mijin Seo, 2021. "Historical Assessments of Inorganic Pollutants in the Sinkhole Region of Winkler County, Texas, USA," Sustainability, MDPI, vol. 13(13), pages 1-13, July.
    7. Pastor, Daniel J. & Ewing, Bradley T., 2022. "Exploding DUCs? Identifying periods of mild explosivity in the time series behavior of drilled but uncompleted wells," Energy, Elsevier, vol. 254(PB).
    8. Karanfil, Fatih & Omgba, Luc Désiré, 2017. "Reconsidering the scarcity factor in the dynamics of oil markets: An empirical investigation of the (mis)measurement of oil reserves," Energy, Elsevier, vol. 137(C), pages 209-218.
    9. An, Sufang & Gao, Xiangyun & Jiang, Meihui & Sun, Xiaoqi, 2018. "Multivariate financial time series in the light of complex network analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 503(C), pages 1241-1255.
    10. Song-Zan Chiou-Wei & Sheng-Hung Chen & Wei-Hung Chen, 2023. "Asymmetric Effects of Prices and Storage on Rig Counts: Evidence from the US Natural Gas and Crude Oil Markets," Energies, MDPI, vol. 16(15), pages 1-25, August.
    11. V. Lipatnikov S. & K. Kirsanova A. & В. Липатников С. & К. Кирсанова А., 2018. "Оценка влияния неблагоприятной экономической и геополитической ситуации на стоимость российских нефтегазовых компаний // Assessment of the Impact of the Adverse Economic Geopolitical Environment on th," Управленческие науки // Management Science, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 8(2), pages 30-43.

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