RigData Insights

Land Rig Day Rates Fall Sharply

  • Tuesday, April 28, 2015
  • Posted By Unknown
Land rig day rates have fallen sharply this year—no surprise, given plunging rig counts and a grim near-term oil price outlook. But there are still mild surprises in how that decline breaks down by rig power type, reports RigData’s Land Rig Newsletter. AC rigs, the favored class today for drilling horizontal wells in unconventional plays that dominate activity today, command the highest rates and mostly work under rate-stabilizing term contracts; however, this group saw the biggest drop in day rates (-13.7%) in 1Q 2015 after logging a YOY drop of -9.1% in 4Q 2014. Mechanical rigs, rapidly losing favor overall, posted much smaller declines; given their bottom-feeding rates, there was little scope for further declines. The biggest surprise was SCR rigs jumping 8% YOY in 4Q14 before dropping -11.2% in 1Q15. When the market recovers, SCR rigs will probably capture more spudder work and conventional shallow drilling markets from  mechanical rigs while competing more aggressively with AC rigs in the unconventional plays where operator returns are thinner.




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