Mmarrkk

Land-Based Drillers Extremely Mispriced

I might take exception on the deep hypothesis. More and more rigs are being focused on unconventional plays like shale gas. In these plays, its not necessarily a depth issue as it is a reach issue...going horizontal. Wells aren't super deep (5000' to 10,000') but there are 1500' to 3000' horizontal sections being drilled. The big focus in unconventional gas drilling and development is turning the drilling program into a manufacturing process. Drilling hundreds of wells at rapid pace, using economies of scale to drag costs out, minimizing non-drilling time such as moving from well to well, etc. Efficiency is the word. The new-build rigs that are currently still on back order are driving efficiency to new levels. The old rigs can't compete.