Well service rigs, operating rigs, and commodity prices

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

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This study examines the degree to which the deployment of well service rigs is responsive to changes in commodity prices and operating rigs in terms of long- and short-run estimates of elasticity. Well service rigs respond more to changes in natural gas rigs than oil rigs, and more to real oil prices than to real natural gas prices. In the shorter term, the findings document that the responses of well service rigs to changes in natural gas rigs and real oil prices are highly elastic, with no significant responses to changes in natural gas prices. The error correction model reveals that the change in well service rig usage adjusts to eliminate disequilibrium in the long-run relationship that exists between rigs and commodity prices. This research shows the important role that well service rigs play in the decisions of exploration and production (E&P) companies as they respond to changes in commodity prices.

Original languageEnglish
Pages (from-to)800-807
Number of pages8
JournalEnergy Sources, Part B: Economics, Planning and Policy
Volume12
Issue number9
DOIs
StatePublished - Sep 2 2017

Keywords

  • Natural gas prices
  • operating rigs
  • time series analysis
  • well service rigs

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