Rig Counts Explained

Every week all I see in endless panicking over rig counts. If the count moves up 10 rigs in a week the world will become flooded in oil if you listen to some people. But will it really? Not even close.
It takes about a month of 24/7 rig activity to actually drill the hole. Then another month to do the fracking and complete a well. And that is the best case scenario. Lets say the crew is really good, there are no break downs and it takes only a few weeks to assemble/disassemble a drilling rig and transport it to a new location. So a rig can drill about six wells a year. How much production would that bring online though? Thanks to the EIA we have access to that information. The Permian basin in Texas is currently the hot area for new drilling, and the average production per well is continually rising. It currently sits at about 500 barrels per day, per well. That is not very much at all. So in a year a rig would bring online maybe 3000 barrels per day. A proverbial drop in the bucket compared to the 100 million barrels per day currently being produced. Even taking into account the 464 total rigs that the US has in operation, that is only 1.4 million barrels a year of new production, not nearly enough to offset the declines of existing wells across the US. These shale fields also have a severe drop off in production, up to a 75% decline after the first year. And because there are currently no secondary recovery methods for horizontal wells, these drop offs will continue.
So when people get all excited about the fluctuation of a few dozen oil rigs, you can ignore their inane blather. You only need to get excited if the rig count starts creeping back up to be anywhere close to the 1600 that the US was running at the beginning of 2015. A single new oil rig will only add about 0.00003% to the global production total in the course of a year. No reason to panic at all.