Land / onshore rigs outlook in North America

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SCM Daleel - Admin

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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

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