From my viewpoint, 2023 has shown us more consolidation throughout the drilling industry than we have seen in the last 25 years. The causes of this are multi-faceted:

• Increased equipment costs
• Labor competition
• Inflation
• Aging equipment
• Aging business owners
• Advancements throughout the industry

That last bullet most challenges those without capital availability or an appetite for debt incursion. But, in addition to all of these internal challenges, we continue to see pricing erosion due to expectations of pricing stability year over year. This erosion fails to match the realities of market conditions, administrative requirements pushed down by customers, added credentialing and myriad other barriers.

As all of these forces lead to increased consolidation, we see a number of simultaneous occurrences: increased need for in-office supervision/management staff, opportunities for additional contractors to capture market share and streamlined projects.

An increased need for people serving supervision/management roles allows an opportunity for more vertical career progression than has typically been seen within the drilling industry. Historically, drilling companies have been fairly flat organizations, including owners who spent half of their time “on the step.” The reality is this is no longer a feasible model in most segments of the drilling industry. As a result, we can provide our tenured drillers the opportunity to take on additional responsibilities and authority.

Having management staff with drilling experience ultimately benefits both the company and the client. A driller understands the need to be an equipment operator, mechanic, janitor and every other occupation, while also being definitively intelligent and able to grasp the idea of profitability and management of change. The unfortunate reality is, the days of agreeing to change the work scope on the fly and “figure out the bill at the end” have long passed. Most of our clients require change order documentation with backup, which needs to be defensible and have written contracts to document it.

As these processes have changed, it has created an environment in which field work can come to a stand still while negotiations occur. The driller in a project management role can navigate this through understanding the project goals, functionality of the contract, commitments to safety and forecasted schedule requirements. This ensures the field crew continues to stay focused, able to keep their eyes on the tasks in front of them and not lost in the forest of information.

Further, drillers in management roles can help to alleviate the increased maintenance requirements of the modern drill rig through education, forecasting and intelligent scheduling. In our business, the increased maintenance requirements on our newer pieces of equipment have completely changed our approach to scheduling to ensure we meet required service intervals and improve overall operability (up time) to maximum practical levels.

With consolidation, we have seen an increase in private investment coming into our industry. This presents a number of unique challenges, most importantly translation of field-level challenges, their relationship to profitability and subsequently capital requirements to resolve them. In my experience, a driller is generally the best equipped to handle these discussions.

Outside of the challenges presented through consolidation, there are opportunities for drillers to enter the marketplace in various regions as an owner/operator. These opportunities are not small in quantity and not geographically limited. Drillers have exceptional business qualifications because we understand the field-level operations component so well. Add a a modicum of financial understanding and the right support from legal and financial professionals, they can be incredibly successful.

I continue to hear from our clients that there are not enough contractors to get the required number of bids, and schedules are too far out. Both of these issues tell me that drilling is continuing to grow in scarcity. Despite all of this, we continue to see depressed wages compared to other industries — a result of a perceived workload scarcity or a real economic level of uncertainty. We need to continue to evaluate our pricing structures to ensure we maintain viability to afford replacement equipment and continue to be compliant with ever-restrictive standards. Drillers are uniquely skilled at identifying opportunities within these regulatory changes.

It is imperative that business owners and management teams evaluate their tenured/experienced staff when considering candidates for managerial roles. Drillers provide unique talents and attention to detail when it comes to the things that provide continued awards and overall company viability. Finally, a driller has the most educated perspective on how to operate a safe drilling program and should be charged to manage their employees to the highest standards.