Rig Dayrates and Utilization

  • Mark J. Kaiser
  • Brian F. Snyder
Part of the Lecture Notes in Energy book series (LNEN, volume 8)


The contract drilling market is characterized by three interrelated measures: utilization, dayrates, and fleet size. Utilization describes the proportion of rigs working to the available fleet at a specific time and place, while dayrates represent the average daily rental charged by rigs of a given class operating in a specific water depth category and region over a specific period. Contractors build rigs to generate cash flow and capture market share. Rig movements between regions are usually not rapid enough to create strong interregional correlations in dayrates and utilization. Rig demand is associated with oil prices which vary dramatically over time, and dayrates are highly variable. When rig supply exceeds demand, low prices result. We characterize global and regional supply, utilization and dayrate trends over the 2000–2010 period. The U.S. Gulf of Mexico was the least expensive jackup market during the decade, followed by the Persian Gulf, while the North Sea was the most expensive jackup market. The chapter concludes with a brief discussion of the contracts used in the industry and the primary customers in each regional market.


Utilization Rate Fleet Size Contract Duration Lower Utilization Rate Deepwater Drilling 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. 1.
    Baker Hughes (2012) Investor relations. Rig counts. Accessed 10 Oct 2012
  2. 2.
    Ball E (2010) Independents, IOCs lead exploration of frontier regions. Offshore 70(11):12–14Google Scholar
  3. 3.
    Baum KE, Munson JR, Marshall JA, Vrooman DK (1998) Turnkey drilling: bringing cost predictability to a risky business. Paper presented at the IADC/SPE Drilling Conference, Dallas, 3–6 March 1998. IADC/SPE 39360Google Scholar
  4. 4.
    Brealey RA, Meyers SC (2003) Capital investment and valuation. McGraw-Hill, New YorkGoogle Scholar
  5. 5.
    Energy Information Administration (2011) Country briefs. Accessed 16 Dec 2012
  6. 6.
    Jablonowski CJ, Kleit AN (2011) Transaction costs and risk preferences: modeling governance in offshore drilling. Eng Econ 56(1):28–58CrossRefGoogle Scholar
  7. 7.
    Moomjian CA (1999) Contractual insurance and risk allocation in the offshore drilling industry. Drilling Contractor Jan–Feb, pp 19–21Google Scholar
  8. 8.
    Osmundsen P, Toft A, Dragvik KA (2006) Design of drilling contracts-economic incentives and safety issues. Energy Policy 34:2324–2329CrossRefGoogle Scholar
  9. 9.
    RigLogix (2011) RigLogix: Upstream intelligence system. Accessed 10 Apr 2012
  10. 10.
    Rystad Energy (2011) INTOSK annual market report (2012–2015). Rystad Energy, BergenGoogle Scholar
  11. 11.
    Rystad Energy (2012) INTOSK annual market report (2013–2016). Rystad Energy, BergenGoogle Scholar

Copyright information

© Springer-Verlag London 2013

Authors and Affiliations

  • Mark J. Kaiser
    • 1
  • Brian F. Snyder
    • 1
  1. 1.Center for Energy StudiesLouisiana State UniversityBaton RougeUSA

Personalised recommendations