Drilling rig day rates in the U.S. declined for the fourth consecutive month, although the pace of the decline slowed a bit, according to the monthly Enverus Day Rate Survey, as rig demand has yet to return to 2022 levels. The U.S. composite rate declined to $23,623, down $129 from August, the smallest sequential decline in the past four months.
The U.S. composite rate has fallen $837 over the past four months from May’s record of $24,460. Even with the slide, the composite rate remains $2,112 higher YOY.
The composite rates in three of the Enverus Day Rate Survey’s measured regions fell by less than $100 – the Gulf Coast, the Permian and the Rockies. In August, all seven fell by $100 or more. Class D rigs (1,500-1,999 hp) working in the Permian declined just $60 sequentially to $30,305; Permian Class D accounts for 44% of all active rigs in the U.S.
Defying the moderation seen in other regions, the ArkLaTex saw its slump intensify in September. Its September composite day rate of $24,581 was a $358 drop from August, the largest sequential decline of any region this year. The ArkLaTex’s Haynesville play has been particularly hard hit by woeful natural gas prices. The Henry Hub front-month closed at $3.166/MMBtu on Oct. 5, its first daily settlement over $3.00 in seven months.
The slide of day rates since May has followed the slump in rig utilization. More than 80% of marketed rigs were in use from YE21 through February 2023, peaking at 86.5% in October 2022. Since then, utilization rates have slumped, spending most of the past five months around 75%. Making the utilization slump even more striking is that September ended with just 804 marketed rigs, a decline of about 100 rigs since June.
While two-thirds of survey participants expect the same amount of work during the next six months, the remaining third of respondents were split, with half expecting more work and the other half expecting less. “Given the state of our down economy and all the turmoil in the world, I have no idea what lies down the six months from now,” a Mid-Continent driller told the survey team.
In a notable shift from recent Enverus Day Rate Survey results, a few respondents said daily operating costs have begun to moderate somewhat, with as many respondents reporting costs going down as going up. “Vendors and suppliers have lowered their prices, so now we can raise our prices slightly and try and get some profit back,” an Ark-La-Tex driller told the survey team.
To see the full results of the Enverus Day Rate Survey for September, check out the latest issue of Oilfield Pulse.
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