On Friday, NYMEX crude futures closed 72 cents lower at $45.59/b.

By early to mid-second quarter, "the rig count will be low enough that US production growth will be flat," said James Williams, president of energy economics group WTRG. "It will probably show up by June."

Regionally, a large chunk of this week's rig count drop was in the Williston Basin, which fell by 12 rigs to 153, down about 23% from a recent peak in early October. The Bakken Shale in North Dakota and Montana is sited in that basin.

In the Permian Basin of West Texas and New Mexico, which has the most rigs of any US play, the rig count fell by six to 481, down 15% from a recent peak of 568 in early December. Another four rigs came off in the Eagle Ford, for a total 181 this week in the south Texas play, according to Baker Hughes data.

The Bakken, Eagle Ford and Permian Basin are considered the "Big Three" US shale plays.

Most of the decline by far came from rigs chasing oil. On Friday, 1,317 of the 1,633 total US rigs were oil-directed, a drop of 49 from the week before.

"In our view, it is becoming increasingly clear that E&Ps are dropping any and all rigs as soon as they roll off contract ... or simply canceling contracts with the most favorable cancellation provisions ... to reduce spending as soon as possible and conserve cash," Wells Fargo analyst Jud Bailey said in an investor report late Thursday.

Experts expect there is plenty more to come, and that total rig counts could fall by several hundred more rigs before drilling activity stabilizes. Recent US peak rig counts came in September, with 1,931 total for the US, and in November for land rigs at 1,876.

Bailey said he has seen signals that large oilfield service companies are now "aggressively" cutting prices for pressure pumping, while 1,500-horsepower AC rigs day rates are hovering around $18,000-20,000, compared with $27,000-29,000 just a few months ago, he said.

Pressure pumping pumps fluids down a well to improve production.

At least for Penn West Petroleum, pressure pumping prices have dropped as much as 30%, company CEO David Roberts said Thursday at the CIBC 18th Annual Whistler Institutional Investor Conference in British Columbia, Canada.

"The service [companies] have enjoyed a pretty rich margin over the last several years," Roberts said. "I'm less concerned about the big companies ... than the myriad numbers of smaller contractors; if you lose those, that's when you get into scarcity in terms of being able to turn back up" when the industry begins to improve.

Others spoke of similar price cuts in other services. James Bowzer, CEO of Baytex Energy, said four or five key service categories stand out on the price concessions -- drilling rigs, hydraulic fracturing crews, well tubulars and casing and other auxiliary services to support well construction.

"Some of those are in the bag," Bowzer said Thursday at the CIBC conference, referring to price cuts. "We can see our way very clearly to a 10% reduction overall," and prices could drop further from there.

Historically, during periods of a 50% or more decline in oil prices, rig counts drop by around 50% over two straight quarters, RBC Capital Markets analyst Kurt Hallead said in a recent investor note.

RBC recently revised their prediction of a US land rig count bottom in the middle of the second quarter, sooner than its earlier Q3 prediction.

RBC's current rig count forecast calls for a total US land rig count down 50% peak-to-trough in 2015, he added. The land and inland water rig count should bottom out in mid-Q2.

Also at the CIBC conference Thursday, Michael McAllister, EnCana's chief operating officer, said his company talked before Christmas to over 100 of his company's roughly 290 service providers that represent 80% of its spending, asking for price reductions.

Now, "we're seeing somewhere greater than 10%," McAllister said, adding the number varies by region and supplier. "And we've told them we'd come back in February and we'll ask again if this environment persists."

Last week, Roe Patterson, CEO of Basic Energy, which provides services to maintain oil and gas producing wells, said in an operating report last week that some of its customers used the December holiday period to shut some projects from low oil prices, which reduced activity that month beyond the normal seasonal impact.

Patterson said Basic's Q4 margins will be partly affected by pricing discounts given to customers "in response to lower demand in competitive markets" which began in early December.

--Starr Spencer, starr.spencer@platts.com
--Edited by Valarie Jackson, valarie.jackson@platts.com