NEW YORK (TheStreet) -- The U.S. land-based, or onshore, rig market could struggle next year as oil producers clamp down on their drilling budgets, impacting the growth of contract drillers such as Helmerich & Payne (HP) .
But this could be an opportunity for the Tulsa, Okla.-based driller to expand its lead as the largest player in the U.S. land market in terms of market share, thanks to its fleet of modern high-specification rigs.
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According to latest data from Baker Hughes (BHI) , the total number of oil rigs in the U.S. has dropped from the peak of nearly 1,600 rigs on Oct. 10 to 1,572 last week, amid 30% drop in West Texas Intermediate crude oil futures since mid-October. And the future isn't looking any brighter.
The price of the benchmark American crude would average around $70 to $75 a barrel in 2015, says last week's report by Goldman Sachs. That's as opposed to the first nine months of 2014, when oil remained north of $90 a barrel.
In anticipation of lower crude prices, some exploration and production companies, such as ConocoPhillips (COP) , have already decided to scale back their operations next year. Others, Goldman Sachs's Brian Singer estimates, will follow suit.
Eventually, capital spending by energy companies on North American onshore fields will drop by 6% in 2015, Singer predicted.
The number of U.S. well drilling permits approved has already dropped by 37% in November as compared to October, with between 28% and 38% decline in permits approved for Texas's Eagle Ford and Permian Basin and North Dakota's Bakken shale formation.
A decline in drilling permits usually translates into a lower number of drilling rigs in the next two to three months.