There is no better indicator of the rapid turnaround in the US land drilling business in the past few months than what has happened with land rig day rates, according to Platts RigData.

In addition to spiking rig counts and higher marketed utilization rates for rigs, sequential changes in day rates in December 2016 turned positive—across the board for all rig classes in all regions—for the first time in more than 2 years. An even bigger jump came in January 2017 that had eased month to month by February, according to Platts RigData’s Day Rate Report. Perhaps an even bigger surprise was the reversal of a common practice related to contract terms.

During the 2015–2016 downturn, many drillers hard-put for work were offering discounts to operators to secure multi-well or term contracts in the brutal business environment. By yearend, some drillers were starting to ask for premiums for same, as operators scrambled to field good rigs and good crews again. Interestingly, mechanical rigs were still getting small discounts (-0.4%) for non-spot contracts in February, while SCR rigs were targeting premiums of +4.5% to +6.5% vs. AC rigs seeking premiums of +2.8% to +4.5%.

Call 1-800-627-9785 to subscribe to RigData’s Day Rate Report, the exclusive monitor of U.S. drilling contractor day rates.

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