Free Republic
Browse · Search
Topics · Post Article

Skip to comments.

Drilling rig market finally improving in U.S., Nabors CEO says
Fuel Fix ^ | February 19, 2014 | Collin Eaton

Posted on 02/19/2014 10:16:55 AM PST by thackney

Growing demand for walking rigs may finally improve the market for land drilling contractors in the U.S., the chief executive of Nabors Industries said Wednesday.

Daily rates for the highly specialized, mobile rigs have begun to increase as more U.S. oil companies use multiwell drilling platforms called pads, Nabors Chairman and CEO Tony Petrello told investors in a conference call. Nabors shares surged Wednesday.

North American drillers have generally lost ground on pricing and rig use as pad drilling and other efficiencies have become common in the Bakken Shale in North Dakota and other major shale plays. A turnaround in the drilling business could lift land drillers out of an earnings slump.

“We believe we’ve seen the bottom,” Petrello said, adding that rig rates increased modestly in the fourth quarter of 2013, but could rise higher this year. “We believe we could deploy more (advanced rigs) in the field and see more demand.”

Nabors’ fleet of about 150 pad-compatible walking rigs saw 94 percent utilization in the fourth quarter, while demand for its older, mechanical rigs has continued to lag behind. And there’s often a high premium price attached to the advanced rigs. It’s a shift in industry spending that has unleashed the nation’s oil output, and has forced smaller land drillers to replace older rigs in order to keep up with giant oil field service companies like Schlumberger.

During the last three months of 2013, the company raked in four times as much profit as it had in the same period the year before, as international drilling markets remained highly active and U.S. rig demand picked up.

So far in the first quarter, though, unusually severe winter weather has cost Nabors several days of rig operations in the U.S. But its outlook for the year remains favorable as rates improve, Petrello said.

The U.S. hydraulic fracturing business has proved more stubborn. A crippling glut in pressure pumping equipment pushed price tags for frac jobs lower over the past two years. Nabors has been able to replace expired pressure pumping agreements but at “a significantly lower rate,” Petrello said.

Still, he added, pricing for frac jobs have begun to stabilize, and the multiplication of shale wells could drive higher demand for services as oil companies reach a plateau on efficiencies.

Across the oceans, increased drilling could lift daily rig rates in international markets as the number of idle rigs declines. And Nabors could see higher international earnings in the second half of the year, when it anticipates rolling out more rigs, Petrello said.

The company is looking to spend $1.6 billion to $1.8 billion in capital expenditures this year, much of it on technological upgrades to its rig fleet.

And it may sell barges and work-over jackup rigs in the Gulf of Mexico, and it is also looking for buyers for natural gas assets in Alaska, Nabors executives said.

Nabors shares rose 13.5 percent in early trading Wednesday to $21.18 on the New York Stock Exchange.

TOPICS: Business/Economy; News/Current Events
KEYWORDS: energy; oil

1 posted on 02/19/2014 10:16:55 AM PST by thackney
[ Post Reply | Private Reply | View Replies]

Image and video hosting by TinyPic

Image and video hosting by TinyPic

Image and video hosting by TinyPic

U.S. Crude Oil and Natural Gas Rotary Rigs in Operation

2 posted on 02/19/2014 10:21:31 AM PST by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 1 | View Replies]

To: thackney

I have been through this whole cycle - all three charts.

I started roughnecking in the ArkLaTex to pay for college in 1971.

It has sometimes been a boney ride, but OTOH it has sometimes been VERY interesting.

3 posted on 02/19/2014 5:30:11 PM PST by muffaletaman (IMNSHO - I MIGHT be wrong, but I doubt it.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: muffaletaman

I started a little later; my first oil project was 1992 after leaving the Electric Utility industry. I started with a project in Yemen.

4 posted on 02/20/2014 4:48:42 AM PST by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 3 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794 is powered by software copyright 2000-2008 John Robinson