The relentless decline in US land rig day rates continues. Yet the US average day rate, aggregated across all rig classes and regions, eased its descent ever so slightly in March. The sequential decrease in March was -1.6% vs. -1.8% in February, according to RigData’s Day Rate Report.
Considering that both results were substantially worse than in January, even this modest good news offers little to be optimistic about. For 1Q 2016, the US average day rate dropped by -4.6% from 4Q 2015. All told, since the all-time record high of more than $19,000 in October 2014, the nation’s average land rig day rate has plunged by -21% and is likely to fall below $15,000 in April—for the first time since 2Q 2010.
Certain rig classes in some regions have shed more than -35% in average day rate in that timespan. According to some drillers surveyed for the Day Rate Report, day rates have likely bottomed out because “they can’t fall any further.” And yet, notes the RigData News & Analysis team, reports persist of drillers running rigs at zero margin.