13th Annual Directional Drilling Survey: Mixed Market Recovery For HDD

By Robert Carpenter, Editor | June 2011 Vol. 66 No. 6

The used drilling rig market continues to mature and become a substantial factor in trade-ins and purchases. The number of used rig purchases over the past three years has increased in part due to the economic recession where contractors needing to replace units or expand their fleet were looking for alternatives to more expensive new rig purchases. About 51.7 percent HDD owners say they have now purchased used equipment with 46.7 percent saying they will seriously consider buying a used rig for their next purchase. Used mid-sized rigs are the most likely units that contractors will buy according to 51.4 percent of the survey respondents.

Rig owners average 4,064 hours of operation for mini rigs before replacement; mid-sized rigs average 4,238 hours of operation; and large rigs log the most hours during their lifespan at 6,182 hours.

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Per foot pricing continues to be very wide-open and hard to definite. Averages for all types of applications ranged from as low as $5 per foot to as high as $140 per foot. As discussed previously, low pricing is a very sensitive subject for all contractors.

Walkover locating systems were utilized by 66.6 percent of rig operators with wireline being used 28.3 percent of the time and other systems about 5 percent.

The HDD fleet grew slightly younger as the number of units that were still operating over 10 years old fell from 12.5 percent in 2010 to 10.0 percent for 2011. This timeframe is marked by the telecom crash when contractors were fleeing the market and those remaining were financially forced to stretch the life of their equipment. In 2010, the number of older units apparently peaked out.

In 2010, about 7.7 percent of contractors reported HDD contracts in excess of $20 million; 13.5 percent grossed between $5 and 10 million for HDD work; 44.2 percent earned between $1 and $5 million; and 34.6 percent made between $500,000 and $1 million. In 2011, 29.9 percent expect to earn more money from HDD contracts, 42.9 percent anticipate about the same HDD revenue and 27.2 percent expect to earn less.

HDPE continues to the most common pipe installed via HDD, being utilized 43.9 percent of the time. Next was PVC pipe at 22.9 percent, steel at 15.5 percent, ductile iron was 12.7 percent, and other types of pipe products at 5 percent.

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