Group 15 Pacific Drilling analysis - Management 124 president University

PACIFIC DRILLING: THE PREFERRED OFFSHORE DRILLER Drone IT Group 1: Names Question 01: In offshore drilling industry the drilling companies are contracted/ hired by the oil exploration companies for drilling and extracting of oil from certain locations offshore (in sea/water bodies). Generally, the oil exploring companies do not have their own drill ships because there is a lot of CAPEX involved in building the drill ships and not to mention the OPEX afterwards. So, the oil exploring companies hire the Drilling companies who owe the ships and are highly specialized for such kind of activities. Now, talking about the offshore drilling industry, undouble is the fact that this is a field which pays quite handsomely but then also a field which is extremely risky. As the saying goes “higher the risk higher is the return”. The simple fact is, there are not many offshore drill ships in the market as compared to the number of oil producers so when the price of crude oilis high, the oil producing companies increase their production many folds and the demand of these handful of drill ships touches sky high and so is the prices. The oil exploring companiesis ready to pay any amount to these drilling companies during such times, but the moment crude price fells, all drilling operating and future projects were kept on hold for the market to recover and this is when the drilling companies faces the bad times.Group 15 Pacific Drilling analysis - Management 124