Source: Fort Worth Star-Telegram | Collin Eaton | July 11, 2017
Oil companies are shelling out more cash and signing long contracts for a limited supply of monster rigs that drill wells much faster than the older models that led the first shale boom in the U.S.
The Houston Chronicle reports some rig suppliers have recently signed 18-month and two-year contracts for these so-called super-spec rigs, collecting up to 20 percent more in daily rates as U.S. producers scramble to lock down the most efficient rigs in the nation’s fleet.
Earlier this year, oil producers had resisted entering higher-priced long-term contracts, but these new agreements with Houston’s Nabors Industries and others signal oil field contractors have regained some clout in a market that earlier forced deep discounts, squeezed profit margins and forced them to cut thousands of jobs during the oil downturn.
“Every single one of the super-spec rigs that can work is working today,” James West, an analyst at investment bank Evercore ISI in New York, said in an interview. “Now we’re seeing that exploration and production companies can’t get these rigs if they don’t sign contracts.”
Rig contractors have dispatched hundreds of these machines across the country in a record 23-week upward streak in the U.S. rig count this year, which ended June 30 as the count fell by one to 940, according to the Houston oil services giant Baker Hughes. In recent weeks, oil prices have fallen to around $45 a barrel, which may discourage shale drillers from bringing on additional rigs.
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