Current uncertainty in the world around COVID and industry downturn, continue to put a lot of pressure on land/ onshore rig operators in North America. And, the worst is yet to come. Here is the summary of what is happening now:
- Market nearly collapsed in terms of rig count and utilization. The rig count is down to 230 rigs vs. 907 a year ago – nearly 75% decline (BH rig count).
- Supply may increase further, in the event of the persistent industry downturn and may have a huge impact on rigs rates in the USA
- Very large idle capacity – average utilization levels in the USA are below 35%
- Q3 2020 expected be the worst for the segment
- Digital technologies that drive efficiencies expected to dominate the theme and be a significant value driver
Outlook. Q2 showed a little decline in average daily revenue, due to termination fees paid to rig contractors for early termination and release of rigs. However, it is expected that a significant pressure on day rates in Q3 2020 will continue, as more supply becomes available and uncertainty in demand caused by COVID 19 pandemic.
Key-value drivers that affect the day rates for land rigs in the USA
- Rig crew qualifications and experience
- Ancillary equipment and services
- Assets that provide consistent and reliable performance
- Digital technology that improves operational efficiencies
Published in August 2020