Day rate (oil drilling)

AAA

DEFINITION of 'Day rate (oil drilling)'

In oil production, a day rate is the amount a drilling contractor gets paid by the oil company for a day of operating a drilling rig. The companies and the contractors usually agree on a flat fee per contract, so the day rate is determined by dividing the total amount by the number of days in the contract.

BREAKING DOWN 'Day rate (oil drilling)'

Day rate fluctuations, which can be wide, are used by investors as an indicator of the health of the drilling market. For example, if day rates fall, investors can take it as a sign to exit their positions.

 

RELATED TERMS
  1. P5+1

    The P5+1 is a group of world powers who have been negotiating ...
  2. Control Of Well Insurance

    Insurance that provides coverage to companies operating a well ...
  3. 1979 energy crisis

    The 1979 energy crisis in the U.S. was an event of widespread ...
  4. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  5. Groundwater

    Water that is found underground rather than on the surface.
  6. Non-Hydraulic Fracturing

    Fracturing rock at depth without the use of fluid pressure. Non-hydraulic ...
Related Articles
  1. Stock Analysis

    Why Seadrill's Dividend Reinstatement Is Unlikely

    Learn why Seadrill suspended its dividend payments in the latter part of 2014, and how lower crude oil prices could hurt the company's future prospects.
  2. Stock Analysis

    Has Seadrill Become a Risky Investment?

    Investing in big oil stocks has long been a safe haven for investors, but falling oil prices and a suspended dividend payment have made Seadrill seem risky.
  3. Chart Advisor

    Higher Oil Prices On The Way--But Just How High?

    Tensions in Iraq - teamed with rising seasonal demand - means rising petroleum prices. We'll take a look at what it means for traders.
  4. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  5. Investing

    The Most Expensive Oil Spills

    The only way to estimate the damage of the BP oil spill is to look at what past cleanups have cost.
  6. Options & Futures

    Why Low Oil Prices Are Bad For The Economy

    You may be paying less at the pump, but how are lower oil prices affecting other parts of the economy?
  7. Investing

    Can a Venezuela Revolt Impact Oil Prices?

    How a social crisis in Venezuela could affect West Texas Intermediate crude oil and Brent crude oil prices.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
  9. Investing News

    U.S. Stock Markets Rebound

    After a string of losses in the past week amid declining oil prices, economic slowdown in China, U.S. and timing uncertainty interest rates hike by Fed, US Stock markets came back with a bang ...
  10. Stock Analysis

    The 5 Biggest Canadian Oil Companies

    Obtain information about some of the largest and most successful major integrated oil corporations that are headquartered in Canada.
RELATED FAQS
  1. Why do investors look at dayrates when evaluating an oil company's contracts?

    Investors look at day rates when evaluating an oil company's contracts because they have a large impact in determining earnings. ... Read Full Answer >>
  2. How much oil must be produced to maintain inventory levels in the United States?

    Domestic energy investors should track the reserve inventory of crude oil for the United States, which is released in a weekly ... Read Full Answer >>
  3. What are average operating expenses for the oil and gas sector?

    The oil and gas sector plays an important role in the economy by drilling, extracting, and processing oil and gas. Because ... Read Full Answer >>
  4. To what extent is the oil and gas sector dominated by a few major companies?

    Oil and gas are two expansive and highly diverse product lines, with active competition domestically and internationally. ... Read Full Answer >>
  5. Why is investing in oil and gas in emerging markets riskier than investing in developed ...

    Investments in oil and gas in emerging markets generally carry higher risks than similar investments in developed countries. ... Read Full Answer >>
  6. How does the long-term outlook of the aerospace sector compare to the broader economy?

    As of 2015, the long-term outlook of the aerospace and defense sector is uncertain, much like the broader economy. That said, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  2. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  3. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  4. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  5. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  6. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!