Land rigs – a fragmented, undisciplined, commoditized market? Why would rig contractors and E&P companies buy land rigs when oil prices are at recent historic lows, E&P firms are reigning-in Capex and there is seemingly an awful lot of idle rigs and equipment stacked in yards (or worse, in the field) globally?

Yet that is exactly what is happening, both in US markets and internationally. In December 2016, Patterson-UTI merged with Seventy Seven Energy Inc, creating a business with over 200 high-spec rigs and over 280 rigs in total. In Russia, Schlumberger this year completed the acquisition of the country’s largest land driller, Eurasia Drilling Company (EDC), and last year operator Rosneft acquired Targin Drilling.

Are these opportunistic, bottom-of the-cycle acquisitions, timed to pick up assets at discount pricing? Or is something else happening in the market?

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