Gulf Coast Registers Smallest Sequential Decline in Day Rate

The sequential change in the Gulf Coast average day rate improved somewhat in July vs. its June result, as this smallest of the major reporting regions matched the best result among the negative performers.

The region posted a -0.17% drop, its best performance since its yearend 2014 result. YTD, that brings the Gulf Coast to a net cume decline of a little more than -11%. The Gulf Coast available rig ratio, by far the highest anywhere, fell again after reaching stratospheric heights this spring, which was just enough to decelerate the region’s day rate decline. Historically,  the Gulf Coast doesn’t see substantial  upward progress in day rates until the ratio falls below 30%; currently  it averages about 40%, but that’s only after having fallen by more than 30 percentage points since April.

Still, the collective effort represented only a halving of the region’s month-to-month  decline rate. Results overall remained  largely  in the minus  column,  including  the swing from positive to negative for the B Class, wiping out last month’s increase of 0.5% with a drop of -0.5% in July. Substantial drops of -$150 and almost $-200 in the bottom and midrange rate category averages drive the decline. Falling by a net cume decrease of about

Gulf Coast Utilization Rates by Rig Class, 2012-2015