Rig Utilization Rate

AAA

DEFINITION of 'Rig Utilization Rate'

A ratio used in the oil services industry that measures the amount of rigs being used as a total percentage of a company's entire fleet. A company's rig utilization rate often speaks volumes about both a company's current prospects and the global economic landscape as well. Quite often during times of economic deflation or recession, rig utilization rates will be quite low, due to a decreased demand for oil.

INVESTOPEDIA EXPLAINS 'Rig Utilization Rate'

In most cases, the higher the rig utilization rate, the higher the revenues for a firm. During periods of growth where the demand for oil is high, rig utilization rates often run into the 90th percentile and even up to 100%. It's important to note, however, that companies that have high utlization rates are running at capacity, limiting the company's short-term capabilities to increase production and revenues should demand increase.

RELATED TERMS
  1. Organic Reserve Replacement

    Oil reserves that an oil company acquires by exploration and ...
  2. Recoverable Reserves

    A term used in natural resource industries to describe the amount ...
  3. Barrels Per Day - B/D

    A measure of oil output, represented by the number of barrels ...
  4. Organization Of Petroleum Exporting ...

    An organization consisting of the world's major oil-exporting ...
  5. Personal Finance

    All financial decisions and activities of an individual, this ...
  6. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
Related Articles
  1. Peak Oil: What To Do When The Wells ...
    Economics

    Peak Oil: What To Do When The Wells ...

  2. Canada's Commodity Currency: Oil And ...
    Forex Strategies

    Canada's Commodity Currency: Oil And ...

  3. What Determines Oil Prices?
    Active Trading

    What Determines Oil Prices?

  4. A Primer On Offshore Drilling
    Forex Education

    A Primer On Offshore Drilling

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center