The outlook for onshore rig demand is improving with elevated commodity prices spurring increased drilling activity in many regions (from the lows of 2020 and 2021). Westwood expects to see a stronger increase in activity than previously forecast, however, operators remain wary of threats such as rapid changes in commodity pricing and the pricing of drilling materials such as drill pipe and frac sands.
Westwood projects the number of wells drilled over the forecast period (2022-2026) to strongly increase year-on-year, reaching upwards of 60,000 in 2026, compared to c. 49,600 in 2022. Global drilling levels are expected to top 2019 drilling levels in 2024, which was not previously considered in Westwood’s outlook last year. The increase in wells drilled is forecast to lead to a year-on-year growth in the number of rigs operational. Westwood estimates that 4,070 rigs on average will be operational in 2022, growing to c. 5,050 by the end of the forecast, representing an increase of 24%.
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