It’s a privilege for me to be able to share with you some information I’ve learned over the last +30 years in this business. I’ll be discussing some of the business side of things of being a Drilling Contractor. Some of this information is also being used in the Rig Manager Training we have held with the newer Rig Managers. Additionally, I’ll be discussing the “SCORECARD” that is being put into place this year.
Hopefully, we believe these are some of the “broad” reasons why we are in this business.
Why do you want to be a Rig Manager? It also applies to you guys – Why do you want to be a Drilling Supt.? Again hopefully, some of these answers are why you are a Supt. BUT………….
As you progress through the ranks, from roughneck, to motorman, to derricks, to driller, to Tool pusher – you not only increased your level of knowledge and understanding of what makes a drilling rig run and how to drill wells, you were given increased levels of responsibility and you made “more” money. Or you were able to hold on to a job, because you had this knowledge and expertise when times got tough and jobs were harder to come by.
These are some of the roles a Rig Manager takes on. While the Driller position on down is primarily concerned with the technical side of the business, when you get promoted to Rig Manager you enter the business and management side of things. As a Superintendent, you build upon what you did as a Rig Manager. You still do a lot of these functions, but not as much detail as you would as a Rig Manager. But, you multiply these job duties by a factor of how many rigs you look after. You have a greater responsibility of “managing” in the Superintendent capacity.
Older Rig – 800 HP mechanical rig Investment - $4.5 MM Day rates - $17,000/day = $500,000/month = $6.0MM /year
New Rig - 1500 HP / SCR Rig Investment - $12.0 MM Day rates - Only $3,000/day less than that 800 HP mechanical rig $20,000/day = $600,000/month = $7.2 MM / year The company is placing a big investment in the hands of Rig Managers and you to manage. On an individual basis, probably largest revenue generator than most other businesses around the rural towns that we operate.
Revenues less Operating Expenses = Operating Income / Profit / or Margin Less: Capital Expenditure costs gets us to a Cash Flow amount that a rig earns on a Daily basis. We like to make as much margin as possible. When I first came to Unit about 3 years ago – target was 40% margin During height of 2006 Boom – some rigs achieved Margins +70% Today – We still like 60% Margins, but market has not allowed this for all rigs.
Two ways to do this: Build the Top Line (increase day rates) When was the last time you dictated the day rate you got for one of your rigs? You don’t have much control over day rates. The market drives day rates. You can help the marketing people by passing on what you hear another rig is getting for a day rate. Be a part of the marketing information gathering process. If you keep a rig working (on a day rate) you increase revenues. A rig down for repairs or a rig move that takes longer than it should affect revenues. Control Operating Costs You do have ability to help control Operating Costs Control Operating Costs and you have done your part. The bottom line will take care of itself.
How many of you see your contracts? Do you pass them on to your Rig Managers? Is it important to know what is in the contract? Repair Clauses – Most contracts (Apache being the exception) allow us so much time for any single repair and a cumulative amount of repair time per month before we go to a $-0-/day rate. i.e. 4/24 - 4 hrs per repair / 24 hrs per month allowed What do you tell your Rig Managers when it comes to Repair Time on the IADC Daily Report? A lot of Repairs are coded to code 21 instead of a code “8”. Call it what it is. If you get the Company man to sign off on a code 21 and it is a code 8, it gets changed or corrected by us or the Operator. If by the Operator, delays our payment of invoice. Contract tells you what we are responsible to provide and to pay for, not only what we get paid for.
Preventive Maintenance System
Discover the Outcome of Working
Unit Drilling has focused on our customers
primary need. (Dependability) We put the true
meaning in loyalty and teamwork. That is Unit.
At Unit we take pride in our ability to maintain
and run our rigs with less downtime than anyone
in the industry.
This provides our customers with the
satisfaction of knowing they have hired the best
for their team.
The following presentation will provide you with
insight to why we are different at Unit.
Unit Drilling’s Maintenance SystemUnit Drilling’s Maintenance System
maintenance system is
our effort to identify
solutions, and prevent
failures. Documentation of
the process provides
records useful for the
growth of our program to
meet our needs both now
and in the future.
The objective is to
efficiency of the
equipment. Included are
maintaining the rig to
extend the life of all
maintenance will decrease
operational costs and
increase profitability for
the customer and Unit
1. Oil Sampling
2. Rig, Engine, Pump & Compressor Inspections
3. Oil Change / Maintenance Logs
4. Maintenance / Service Alerts
5. Daily Maintenance Guide
6. Top Drive Maintenance System
7. Action Item Website
8. Rig Managers Website
9. Rig Tracking Management System Phase I
10.Rig Tracking Management System Phase II
Components of the Maintenance SystemComponents of the Maintenance System
Oil analysis results provide alerts for drawworks, rotary
tables, air hoist, swivels, pumps, hydraulic units, and
engines that are malfunctioning or neglected.
The response time from sample interval to the test
results has decreased so much that minimal wear is
incurred by the equipment. (This allows the equipment to
be cleaned up on a rig move and put back into service.)
Due to oil analysis the working lifecycles of Units
equipment is increasing and remains repairable after
Oil analysis saves money by slowing down equipment replacement and unnecessary
repairs while reducing down time on the customer.
Oil Sampling Program
Rig, Engine, & Pump InspectionsRig, Engine, & Pump Inspections
Technicians are required to turn in all inspections to the maintenance
department the day after the inspection is complete.
The inspections will be performed by Unit Drilling technicians every
The inspections are in place to monitor equipment and find problems
before they produce total equipment failures.
The inspections provide an efficient means of allowing Unit to utilize
the full life cycle of the equipment.
This process allows time to fix the problem before it creates down
Action items are created upon each inspection and they will be
followed through by the rig manager, maintenance department, and
Unit Drillings OilUnit Drillings Oil
Change/Maintenance LogChange/Maintenance Log
This log is the tool that provides all required oil changes,
sampling intervals, magnetic particle inspections, oil
specifications, and all specific equipment testing for your rig.
This tool will let each rig manager know the maintenance that
needs to be completed when they come on their shift. (Assures
Rig Manager Communication)
The superintendents will view the logs upon their regular rig
visits to ensure that the required maintenance is accomplished.
The service manager will need a copy of each log sent by e-
mail on the first of each month to store in the rigs electronic
file for future use.
In case of a computer crash they will still have their history and
can continue with their original logs.
Maintenance / Service AlertsMaintenance / Service Alerts
This procedure is made to respond after multiple
problems are found from specific equipment issues.
Research is done with the manufacturer and in house
testing to fix the issue that will work as a standard
for all rigs. Maintenance alerts are not intended to
offend anyone because it is always associated with
multiple rig issues. They are intended to notify rig
managers and personnel to help us prevent further
Daily Maintenance GuideDaily Maintenance Guide
The guide will train all new personnel and remind experienced
hands on the daily maintenance required on all rigs.
It starts at the crown and follows the general layout of all rigs.
It will guide the rig personnel on what needs to be lubricated
and checked on a daily basis. It contains the specific amounts
of daily grease according to size and manufacturer
The Superintendent will ensure the guide is being used to meet
the rig specific maintenance upon his routine visits.
Superintendents will decide the best way for their rigs to document
the Daily Guide.
Top Drive Maintenance SystemTop Drive Maintenance System
This system will only apply to the rigs that have top drives.
There is a Daily Report that the rig personnel fills out and
forwards to the top drive technicians. (The techs review the
reports and take action as needed.)
They turn in a summary to the maintenance department that
logs the items needing repair and items that are repaired. The
repair items become action items and are followed through by
the techs, rig personnel, superintendents, and maintenance
There are 30/60/120/500/1000 day inspections that have to be
performed and the documentation is to be forwarded to the
A Top Drive Inspection Board is then used to track all time
frame repairs done to each unit every year.
Action Item WebsiteAction Item Website
The website www.contexx.com/unit now hosts the maintenance
The format and layout are the same as the safety department.
This site is helping everyone involved with the maintenance
system become aware of the equipment that needs repair.
It is a tool that will ensure communication between rig
managers, maintenance personnel, and the maintenance
This site will have a direct link from the Unit Drilling Rig Manager
Intranets main page, division pages, maintenance pages, and
the safety pages.
Rig Managers WebsiteRig Managers Website
The website contains all current forms, logs, inspections, repair
histories, equipment manuals, maintenance alerts, cross/quick
references, rig specific documentation folders, oil sample
labels, and the rig manager maintenance training book.
The maintenance department will ensure the forms and logs are
the most current and provide any missing manuals or documents
This website will also host payroll, hiring, safety, human
resource, 401k and all other information the rig manager will
need at the rig site.
Everything the rig manager will need to take care of his
personnel and train them will be accessible through this site.
The website will have links to every site the rig managers need to
go to do their business. Examples are: (Unit Corporation home
page, oil analysis, action item, 401k, e-mail, etc…)
Rig Tracking Management SystemRig Tracking Management System
Phase IPhase I
This is Unit Drillings new software that will track all rig, yard,
shop, vendor, & pre-order inventories.
All rigs have been physically inventoried in groups according to
geographic location. The equipment have asset tags and the
information has been updated in the software.
The software provides work orders for vendors and Units repair
shops to use. This function will allow all repair information to be
recorded for each piece of equipment.
The history of repair is important in the event of an emergency
failure. The software will record modifications and parts made
upon past repairs allowing us to have special order or machined
parts in a timely fashion.
Rig Tracking Management System Phase II
This is Units database tracking system that is used to
record documentation, issues, action items, provide
job w/o #’s, assign inspections, and provide data for
research between equipment, divisions, & shops.
The data bases provide figures that help in
determining what steps should be taken to improve
the processes of the system. The data provided by
the system will be fact based information as