The US oil and gas industry has long focused on rig count as a critical component of activity level assessments and production forecasts. But as the Energy Information Administration’s first Drilling Productivity Report shows clearly, in major plays like the Bakken and Eagle Ford, new well production per rig has been rising even as rig count has been falling, for both oil and gas, making it a less reliable indicator of future output trends (see charts below).

“New technologies for drilling and producing natural gas and oil have made traditional measures of productivity, such as a simple count of active rotary drilling rigs, obsolete,” the EIA said. “With more than half of newly-drilled wells now producing both oil and natural gas, it is also no longer sufficient to categorize rigs as either oil-directed or gas-directed.”

“Increases in drilling efficiency and new well productivity, rather than an increase in the number of active rigs, have been the main drivers of recent growth in domestic oil and natural gas production.”

You can read the full report here.