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
Day rates by rig class
Strong improvements in three of the Gulf Coast’s reporting classes vs. one significant reversal from positive to negative marked the overall better performance for the region’s average day rate in July.