Since 1981 domestic drilling activity has declined from nearly 91,500 wells to last year's total of approximately 66,000. Oversupply of natural gas and decline in oil prices, plus political threats and the takeover and restructuring binge engineered in the financial community combined to create a severe downcycle in an industry which has been traditionally cyclical.

The percentage of exploratory success and the overall development of additional supplies of oil and gas has been encouraging. However, since 1984 the U.S. has produced 120 percent of what was found in those years.

The downturn has been accompanied by a reduction in drilling and completion costs so that the ratio between even lower prices than those existing early in 1986 is still favorable on a comparative basis.

Deep drilling has been severely impacted by reduced economics, but the proved existence of opportunity in deep horizons insures that it will increase as economics improve.

Oil prices are not likely to remain below the late-1985 level for any length of time and the rise of demand against the realities of proved reserves insures that a new resurgence fo drilling will appear in the Nineties if not before.

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