Day rate (oil drilling)

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. Carbon Dioxide Tax

    A tax on businesses and industries that produce carbon dioxide ...
  2. Nonrenewable Resource

    A resource of economic value that cannot be readily replaced ...
  3. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  4. P5+1

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

    Insurance that provides coverage to companies operating a well ...
  6. 1979 energy crisis

    The 1979 energy crisis in the U.S. was an event of widespread ...
Related Articles
  1. Stock Analysis

    3 Oil Companies Losing Money with Current Oil Prices

    Learn about three oil companies that are losing money with low oil prices. See how companies in the sector with high debt loads are facing difficulty.
  2. 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.
  3. 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.
  4. 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.
  5. Investing Basics

    Oil: A Big Investment With Big Tax Breaks

    Oil and gas investments can provide unmatched deduction potential for accredited investors.
  6. 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.
  7. 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?
  8. Options & Futures

    How To Buy Oil Options

    Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange.
  9. Stock Analysis

    The Top 5 Oil and Gas Penny Stocks for 2016 (XCO, CHK)

    Learn more about the oil and gas industry outlook, and discover the top five oil and gas penny stocks investors should consider for 2016.
  10. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
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. Is Norway a developed country?

    Norway is a highly developed country, and typically has a world GDP ranking in the top 30, with a 2014 GDP at $500 million ... Read Full Answer >>
  3. Is Qatar a developed country?

    Qatar is a developing country, according to the United Nations. However, as the country with the highest gross domestic product ... Read Full Answer >>
  4. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  5. Why do some oil refineries get tax exemptions?

    Oil refineries normally receive tax exemptions due to tax loopholes. The extracted fuel exemption, for example, one of the ... Read Full Answer >>
  6. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center