Who are the main land drilling rig contractors in the US?
The practice of “land drilling” (or “onshore drilling”) refers to the drilling of oil and gas (O&G) wells on land (as opposed to offshore drilling).
The land drilling market worldwide is structured primarily as a rental market, not a sales market, where land drilling companies lease their rigs to E&P companies for an agreed period of time – weeks, months, or years – at a day-rate. The rigs are then used to drill wells and execute the E&P’s drilling programs.
Drilling opportunities are analysed and explored in order, leaving a series of dry holes, until a discovery is made. It is rare for an E&P company to actually own the rigs which they operate, but there are some exceptions such as Chesapeake, who will purchase their own fleet of rigs.
Under these rental contracts, a turnkey cost is paid by an E&P business to a middleman. This includes an insurance premium, which is returned if nothing goes wrong, but may be lost if there are difficulties. Higher specification equipment commands a larger premium.
Investors require a minimum level of return for their investment dollars in drilling operations, and typically equate cost with risk. These turnkey drilling contracts may limit risk by guaranteeing a minimum number of wells that can be drilled with the rig. The contract will also outline how the rig can be used – including the pieces of equipment, when to change pieces, temperature and pressure tolerances and the weight of mud.
The International Association of Drilling Contractors (IADC) lists 547 members in the category of Land Drilling Contractors. According to Statista, the key US land drilling contractors are: Nabors Industries Ltd, Helmerich & Payne Inc, Patterson-UTI Energy Inc, Precision Drilling Corporation and Pioneer Energy Services Corp.
The Top 5 Drilling Rig Companies:
Nabors operates the world’s largest land drilling rig fleet, with around 500 rigs operating in over 25 countries – in almost every significant O&G basin on the planet. It also has the largest number of high-specification rigs (including new AC rigs and refurbished SCR rigs) and custom rigs, built to withstand challenging conditions such as extreme cold, desert and many complex shale plays.
Headquartered in Tulsa, Oklahoma, H&P is a global business with land operations across the US, as well as offshore operations in the Gulf of Mexico. It is engaged primarily in the drilling of O&G wells for E&P companies, and recognised for its innovative FlexRig technology.
Patterson-UTI operates land based drilling rigs, primarily in O&G producing regions of the continental US, and western Canada. The company also provides pressure pumping services to US E&P companies and specialist technology, notably pipe handling components, to drilling contractors globally.
Precision is an oilfield services company and Canada’s largest drilling rig contractor, with over 240 rigs in operation worldwide. The Company has two segments. The Contract Drilling Services segment operates its rigs in Canada, the United States and internationally. The Completion and Production Services segment provides completion and workover services and ancillary services to O&G E&P companies in Canada and the US.
Pioneer operates a modern fleet of more than 24 top performing drilling rigs throughout onshore O&G producing regions of the US and Colombia. The company also offers production services include well servicing, wireline, and coiled tubing services – supported by 100 well-servicing rigs, and more than 100 cased-hole, open-hole and offshore wireline units.
Together these five companies dominate the US rental market. Other smaller but prominent contractors include: Parker Drilling, Unit Corp, Independence Contract Drilling, Seventy Seven Energy, Schramm and Ensign Drilling. Beyond these players, the market is highly fractured, with many “mom & pop” style drillers.
In Texas, generally considered to be the centre of US land drilling, RigData reports that there are currently 678 active rigs – split between Helmerich & Payne (160), Patterson-UTI (85), Nabors (64), Precision Drilling (39) and 77 other drillers (330).
The Market For Land Drilling Rigs & The Companies Manufacturing Them
As far as purchasing the rigs, there are two distinct markets – newbuilds and secondary transactions.
Most new onshore rigs, both drilling and work over rigs, are built by OEMs in China. In the US, the larger vertically integrated land drillers have in-house manufacturing operations, so they will outsource some equipment construction, but assemble the new rigs at their own facilities. The leading provider of US newbuild rigs is National Oilwell Varco.
The secondary market, where existing rigs are sold, is largely auction dominated with mostly older rigs changing hands. As a rule, the big land drillers do not sell their newbuild rigs, as each has their own flagship designs.
Robin is an energy analyst and researcher for the Winston Churchill Memorial Trust.