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03 24, 2014 by by Collin Eaton in Oil field services
Helmerich & Payne and other early adopters of new rig advances have held an edge over latecomers with older models, but the technology gap is narrowing and a recent upturn in demand may begin leveling the field, according to a report released this week.
Earlier this year, Houston-based drillers Nabors Industries and Patterson-UTI Energy reported higher earnings as West Texas oil companies switch out older rigs for souped-up horizontal drilling rigs in the Permian Basin.
“We believe we’ve seen the bottom,” Nabors CEO Anthony Petrello told investors last month. “We believe we could deploy more in the field and see more demand.”
The efficiency gains that drove U.S. shale production rates higher in recent years have begun to slow as the number of wells drilled for every rig flattens, increasing demand for rigs and lifting prices for advanced-rig contracts across the board, credit ratings agency Fitch Ratings said Thursday. Fitch analysts wrote that the slowdown in efficiency gains has been spotted in the Eagle Ford Shale in South Texas, the Marcellus Shale in Pennsylvania and other major plays.
Earlier this year, Houston-based drillers Nabors Industries and Patterson-UTI Energy reported higher earnings as West Texas oil companies switch out older rigs for souped-up horizontal drilling rigs in the Permian Basin.“We believe we’ve seen the bottom,” Nabors CEO Anthony Petrello told investors last month. “We believe we could deploy more in the field and see more demand.”
U.S. land drillers that began revamping their fleets in the late-1990s and early 2000s are seeing operators use more of their rigs and pay them higher daily fees, largely because operators have favored faster units with rotary steering systems, top drives and massive mechanical feet that let them move between well sites.Shale wells rapidly deplete after oil producers first begin pumping crude, forcing efficiency gains that eventually led to the widespread adoption last year of multiwell drilling platforms called pads, which enable producers to drill several wells for each rig they deploy.
Tulsa, Okla.-based Helmerich & Payne, the first to roll out new rig upgrades in the 1990s, saw its utilization rate hit 84 percent at the end of last year, 15 percentage points higher than its closest competitor, Patterson-UTI. And H&M’s day rates — about $28,000 at the end of 2013 — were higher than its peers, as well.“The first mover drillers will continue to realize stronger metrics,” Fitch analysts wrote.
Several land drillers have set a “moderate outlook by providing largely flat utilization rate” this year as they worry efficiency gains could increase again and a large number of new rigs coming on the market to tamper demand, the credit ratings agency said.
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