The London-headquartered firm forecasts the number of operational rigs to rise by 19% over 2015-19 as drilling activity recovers, based on a scenario where the oil price returns to pre-crisis levels of $US70-80/barrel next year.

Asia Pacific is expected to see the largest regional increase in capable fleet size, with 230 units forecast to be added in 2015-2019.

The recent decline in oil price is expected to result in a 19% drop in onshore wells drilled this year, with several operators having already announced planned expenditure cuts.

DW expects this projected fall in drilling activity to have a significant impact on rig demand, with the global operational and active rig populations forecast to decline by 11% and 12% respectively in 2015.

“Increased well depths and drilling complexity have resulted in rising demand for high horsepower rigs, with the global number of active rigs rated over 1250 HP having risen by 33% in 2010-2014,” said Katy Smith, author of DW’s latest report.

She expects this trend to continue over the forecast period at a compound annual growth rate of 5%; with more complex well drilling requirements also expected to drive an increase in expenditure on components such as top drives over the 2015-2019 period.

“An increase in the number of rigs being converted to AC power, as well as the use of technologies such as pad drilling, is expected as operators seek to maximise the efficiency of drilling operations,” Smith said.

The report’s editor Steve Robertson said downside risk remains if the oil price weakens further, but also upside potential if the oil price recovers in the coming months.

“Despite the fact that onshore drilling activity is comparatively lower-cost, high Capex offshore projects typically have much longer planning cycles and will usually be so exposed to oil price movements and particularly so once past FID and the major contract awards,” Robertson said.

“We anticipate that a reduction in the US rig count will, given the rapid decline rates of unconventional wells, be a key mechanism by which excess oil supply is eroded and should help bring upward momentum back to the oil price.”

Gaffney Cline and Associates’ Oil and Gas Monitor which tracks onshore and Gulf of Mexico (GOM) activity in the light of the oil price crash revealed that while the US onshore rig count stood at 78 on Saturday compared to 83 the previous week, the offshore GoM rig count continues to remain “fairly stable”, adding one more rig and closing up 2 index points to 88.

GCA executive director and senior strategic advisor Bob George said the fall in rig count accelerated last week, with a particularly large fall (37) in the Permian Basin.

“In contrast to the fall in rig count, it has been a roller coaster time for oil price with both Brent and West Texas Intermediate in the end gaining around $10/bbl from the price trading just before last week’s rig count was announced,” George said.

“For the first time this year prices climbed above their closing 2014 level.

“While sentiment on price may at the moment appear to be more up than down, what rises so quickly can just as quickly fall – as it did in the first few days of this year.

“Operators are likely to still remain very cautious and seek greater stability before changing plans so recently put in place.”