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Lack of Australian rigs a fallacy: Senex CEO

22 Feb 2019 9:31 AM | Sonia Harvey (Administrator)

THE last down turn in onshore drilling work at the start of last year saw rig contractors park their fleets until the market bounced back, but now that it inevitably has explorers are cautious that a lack of experienced hands could be having a negative impact.

Received wisdom suggests rig demand is outstripping supply but it could be the people who operate them that are missing.  

Speaking during a half-year results conference call Tuesday Senex Energy CEO Ian Davies said that the view that rig availability is tight was not an issue facing the sector. 

"I think it is something that is a little opaque in the market. We're out for tender as we speak for rig lines and well services. We understand exactly which rigs are available and it's a fallacy that there are no rigs available.  

"There are plenty of rigs, it is just lining up the actual rigs with the work program and timing. And we've got that well in hand.  

He said experienced rig crews were few and far between, something that came down to the low oil price in recent years which saw experienced hands leave the industry for good.  

"I think [that it is] important to get the good rig hands and the good operators back into the industry because the last time there was a down turn in the industry we lost a lot of people - and they were lost permanently - so you think rig hands in particular the crews that operate the rigs we had a permanent drain across the industry the last downturn.  

"We're seeing some of them come back, and I think one of the things to note when people talk about a lack of rigs, its generally a lack of rig crews that has actually been the issue more than anything else," Davies said.  

He also welcomed recent wage growth, something he touched on in the recently released quarterly results also.  

 "We are seeing wage inflation across the industry [which] I actually see as a positive because the industry was zero to negative wage growth over the past few years," Davies said.  

"In terms of cost inflation, the fact that we're out to tender will bear the results of any cost inflation out. But what we're not seeing material cost inflation across the board," Davies said.  

While rig availability is not an issue facing Senex, Davies did make the observation Longer term contracts like the one Senex currently has out for tender has the potential to encourage people to return to industry, something the company says is already having an effect.  

A Senex spokesperson told Energy News today that while drilling companies lost people over the past few years, they retained enough experienced professionals and are continually developing their workforce.  

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