Fresh off the heals of “Davidson” trying to come up with a new way to look at rig counts, he now tackles the efficiency of the industry. This is helpful as it helps us see productivity and thus profits trends in the industry.

“Davidson” submits:

The E&P Efficiency Index is an effort to capture the changes in technology and methods employed to lower extraction costs in the E&P sector. The E&P industry has increasingly applied ‘lean’ processes to get more out of less the last 20yrs.

The E&P Efficiency Index = (Oil+Gas Production Indices)/(All Employees Oil&Gas Extraction)

The E&P Efficiency Index has risen from an avg low of ~1 in 2008 to 2.17 through Dec 2018 (Oil&Gas Production Indices reporting lag by 3mos). Efficiency has more than doubled.

(Click on image to enlarge)

Together with the E&P Activity Index, the E&P Efficiency Index may be useful in describing and tracking changes in your industry. Both are simple concepts, but I think do the job.

If footage drilled data was available, it would help in understanding the rise in use-intensity each drilling site and rig deployed, but that data is not available.