The Drilling Of Fshore Drilling Industry - 1509 Words

The offshore drilling industry can be split into 5 key markets: upgrade market, contract drilling market, second-hand market, scrap market and contract drilling market. Among them contract drilling market is most important, because it ensures smooth cash flow between markets. drilling units is summarised in the table below. The table above describes cash flow within offshore drilling markets. Contract drilling market leases drilling units to OG companies to drill or service wells, in turn they receive day rates. The day rate is the daily price to lease a rig and includes the use of the rig and its crew but does not include most of the other costs associated with drilling and completing a well (e.g., casing, drilling fluids, logistics, well evaluation, etc.). The drilling service industry is the largest and most closely followed of the five markets and drives the activities of investors in the other markets. The new build market uses shipyard labour and capital to convert steel and third party equipment into rigs. Drilling contractors enter into turnkey contracts with shipyards for the construction and delivery of one or more rigs, or yards may build on speculation. The new build market is primarily Asian with major shipyards in Singapore, South Korea, and China. The upgrade market is a ship repair market which both upgrades and maintains rigs. Upgrades improve and modernize rig technology and represent significant capital expenditures. In the second-hand market, rigs are