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Drilling Services Contract

Parties to a drilling contract should have a written contract.

Operators contract a mobile offshore drilling unit (MODU) for a specific well or drilling program, or for a specific period of time (a "term" contract). The relationship between the operator and the drilling contractor that operates the MODU is specified in a contract.

The length of the contract usually is determined by the number of wells the operator wants to drill. He must decide whether a term contract or a contract for a specific number of wells is best for his program.

The use of a long-term contract is usually driven by market conditions, with a tight rig market usually resulting in term contracts. This is especially true if a new rig build is involved; the drilling contractor’s financial institutions may require a reasonable payback on the loan before the contractor can sign a contract and build the unit.

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WHAT SHOULD BE INCLUDED IN A WELL DRILLING CONTRACT?

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  • The start date of the job

  • Any guarantees or warranties that will be provided by the contractor

  • The type of well that will be installed

  • The diameter of the well casing that will be installed

  • The thickness of the well casing that will be installed

  • Proof of insurance

  • Agreement to follow all state and local building codes and regulations

  • The type of well cap or seal that will be used

  • The type of screen that will be used, if needed

  • The type of disinfection practices that will be used

  • What cleanup services will be provided by the well drilling contractor?

 

Of course, some of these things may or may not apply to your particular well drilling job. Each case is unique. However, the need for a written contract should always be a high priority. It’s the best way to know exactly what you’re getting from your contractor. It also helps hold them accountable for doing the work.

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