Energy investors have taken bets for years on what they thought was an important indicator of future energy production: the weekly rig count data provided by oil service firms.
They may want to be careful about how much money they put on the table.
A Reuters analysis of the data, and interviews with officials at companies involved in collecting and compiling it, shows that it may sometimes be an arbitrary and misleading gauge subject to revisions.
The culprit appears to be the fracking boom and the complex geology that has made it much more difficult to decide whether a rig is likely to discover oil or gas in large quantities, often leading companies to rely on guesswork when drilling begins.
At stake is not only the direction of U.S. natural gas prices, but the credibility of U.S. energy companies desperate to show investors that they are drilling for more oil — which is near $100 a barrel — and less gas, the price of which remains depressed at near a decade low.
Equity analysts need to know what a company is likely to produce to predict its profits; gas traders are desperate to anticipate any let-up in the unrelenting gush of supplies.