Source: Platts Day Rate Report | February 2018
The dawn of a new year brings with it an improving outlook for US land rig day rates. While no one is expecting a huge surge in day rates this year, the signs are pointing to at least a modest uptick compared with the average sequential gain seen in 2017. This month debuted the first sequential monthly increase in average day rate—aggregated across all regions and rig classes— of more than a half-percent since the first half of 2017, according to Platts Analytics’ Day Rate Report.
The US average day rate in January, aggregated across all regions and all rig classes, rose sequentially by 0.51% to $15,354. That was double the rate of gain in December and as much as last October and November combined. But it’s well short of the 1% average monthly increase the market saw in the first half of last year. On a quarter-to-quarter basis, the increase was 0.80%.
Because Platts Analytics’ base forecast points to fairly modest growth in rig demand this year amid evidence of a persistent surplus of idle premium rigs, our expectation lines up with what we’re hearing from drillers and operators: Modest growth in rig demand, modest improvement in day rates, and a tendency for operators to counter drillers’ calls for better rates with offers of performance incentives that may very well transform the market anew.
The February issue of the Day Rate Report will publish the week of February 26.
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