In an article in the Los Angeles Times, Benny Teegarden, the owner of Venture Drilling Co. in Cushing, Okla., said he had to cut his employees’ salaries and shut down work. Like many other oil men, he believed that “sooner or later the price of oil would go back up and there would be another boom. It is the cyclical nature of the business, and if you are an oil man, you take that for granted and just hope you can pull through the bad times.”

Another operator pointed out there is no point in producing oil from stripper wells. With the price of a barrel of crude hovering at about $12, he would earn less than it would cost him to extract it from the ground.

But, you might say, oil prices aren’t at $12 per barrel. But they were when this article was printed March 23, 1986.

For those of us who were around at that time, we remember John Cassidy’s equipment yard outside Stroud, Okla., which was filled with “millions of tons of rigs and giant motors—and everything else needed for drilling,” according to the Los Angeles Times article.

As the article continued, “While the rest of the country is enjoying lower prices, Texas, Oklahoma and Louisiana are suffering,” said John Reid, a spokesman for [then] Oklahoma Gov. George Nigh. “It isn’t good.”

Now you can add North Dakota, Wyoming and Colorado to the list of suffering states.

In Morgan City, La., “Ray Oubre, a tug boat captain servicing rigs in south Louisiana, has taken to building custom duck blinds to help make ends meet,” the article added. In today’s market I guess he could start his own reality TV show to make some money. In the article Alexander Holmes, an economist at the University of Oklahoma, said, “The Oklahoma oil industry is literally coming to the end of its time.”

All of this points to how many times the oil industry goes through these cycles. And the rhetoric doesn’t change. Oklahoma’s oil
industry was coming to the end of its time—until the SCOOP and STACK plays came into existence.

The first time the Baker Hughes rig count dropped below 1,000 was March 2, 1970. By Dec. 28, 1981, it was at 4,530 rigs. On July 14, 1986, it reached a low of 663 rigs (a decline of 85.4%). On Aug. 24, 1987, it was back over 1,000. Then it bottomed at 603 rigs on April 16, 1993, rising to 1,032 rigs on Sept. 5, 1997, before dropping to 488 rigs on April 23, 1999.

Recently, the rig count decreased to 450 rigs for the week of April 1, 2016—no fooling. That’s down from 2,026 rigs during the week of Nov. 4, 2011—a decrease of 77.8%.

And one of those old sayings, “what goes around, comes around,” is appropriate today. The rig count is still a good indicator of industry ups and downs.

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