Onshore Drilling (North America) –Market Analysis

  • Rebounding oil prices have boosted the drilling activities across the globe
  • Shale gas boom has pushed ahead the utilization rate of onshore rigs in the region
  • The North American rig count is expected to grow at CAGR of 4 percent until 2022


  • As the shale gas boom is driving the market in North America, the demand of onshore rigs have been high in the region. With the improvement in oil prices, the rig count rose to 876 in 2017 from 509 in 2016
  • The recovery in the global land drilling market, led by North America, is being sustained with the trend toward more efficient, higher specification automated rigs
  • Rig utilization rate is expected to recover and would be about 55 percent in 2018 in North America, after downfall in 2015 – 2017
  • US rig count crossed the 1000 mark in April 2018, and topped the highest in November 2018

 Onshore Drilling (APAC) –Market Analysis

  • The rig utilization rate has been steadily increasing from early 2017 and is about 70 percent since January 2018.
  • In 2018, utilization of land rig in APAC has recovered and is been maintained at an average of 70 percent
  • By 2021, rig demand is expected to be at the rate of 8 – 13 percent, as oil prices are recovering and rising demand 
  • India, China and Indonesia are the major oil producing countries in the region, which have high level of utilization of rigs in the region
  • Oil companies are preferring electrical rigs over mechanical rigs, as it gives them the advantage over cost and time factors, though its day rates are expensive
  • Rebounding oil prices have encouraged E&P operators to invest in exploration activities

Market Overview –North America

  • Demand for land drilling rigs has increased by more than 40 percent as oil prices are recovering
  • The Permian Basin in the US and Alberta in Canada have been the key region for oil exploration in North America
  • Based on drilling activity, North America has 1,029 active land rigs as of 7th December 2018
  • Top states in the US, on the basis of active land rig count, are as follows: 

            – Texas (513) 
            – Oklahoma (134) 
            – New Mexico (95) 
            – North Dakota (52) 

  • More than two-third of land rigs are active in four states primarily, due to ‘Big Three’ shale basins namely Bakken, Permian Basin, and Eagle Ford, which has the highest number of shale wells
  • The Permian basin in the US, specifically Bone Spring and Wolfcamp, plays an vital role in the US oil production

Key Cost Drivers 

  • In the current market condition, buyer has a high control in choosing the supplier, due to the low demand and rig utilization rates 
  • The buyer must keep a track on the supplier’s financials to have a better contract leverage