U.S. drilling day rates appear to have turned the corner, moving higher in November across all the Enverus Day Rate Survey’s seven regions amid cautious optimism as 2024 approaches. The U.S. composite rate rose $58 to $23,679 from October after sliding $840 over the previous five months.
For the Permian, the composite increase was a meager $3, the lowest for any of the regions. Only two regions rose by triple digits: the Gulf Coast, which increased $155, and the Rockies, which climbed $141.
The losing streak started to ebb in October with three of the survey’s seven regions showing gains and the U.S. composite slipping a mere $2. Between May and October, the U.S. composite declined 3.4%. Even after that slide, November’s U.S. composite is $872 higher YOY, with all regions gaining in the 2.0-5.3% range YOY.
The Ark-La-Tex fell the most in the May-to-October span, down $1,129 or 4.4% amid slumping natural gas prices. After the Henry Hub front-month spent nearly all of February through October below $3.00/MMBtu, it moved above that level in the first half of November. However, a warm start to winter has kept gas under $3.00/MMBtu since Nov. 17.
While the overall market for rigs remains sluggish, some drilling contractors in the current survey noted a slight uptick in demand as 2023 came to a close. Rig wait lists, bid inquiries and work backlogs showed a slight improvement compared with the prior survey. “I’m sure some of the drillers out there might be ‘doom and gloom’ about the future of the land rig industry, but I’m remaining open to what 2024 has to offer,” an Ark-La-Tex driller told the survey team.
During the next six months, most surveyed drilling contractors said they believe work volumes generally will increase after the new drilling year kicks off. “I believe we will have an uptick in business in the first quarter of 2024 with a 20% to 40% increase in work volumes,” a Mid-Continent driller told the survey team.
“Our daily operating costs are still up as it is hard to find the equipment you need for a rig with the suppliers charging premium prices for hard-to-get items,” a Gulf Coast driller told the survey team. A total of 55% of drilling survey respondents reported daily operating costs were steady during the past three months, and the remaining 45% said costs had increased somewhat again. A few drilling respondents remarked that they were focusing on scheduled maintenance of equipment to avoid costly repairs or replacements in the future.
To see the full results of the Enverus Day Rate Survey for November, check out the latest issue of the Pulse Report – Holiday Edition.
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