Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89647
Authors: 
Osmundsen, Petter
Rosendahl, Knut Einar
Skjerpen, Terje
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4532
Abstract: 
We examine the largest cost component in offshore development projects, drilling rates, which have been high in recent years. To our knowledge, rig rates have not been analysed empirically before in the economic literature. Using econometric analysis, we examine the effects of gas and oil prices, rig capacity utilisation, contract length and lead time, and rig-specific characteristics on Gulf of Mexico rig rates. Having access to a unique data set containing contract information, we are able to estimate how contract parameters crucial to the relative bargaining power between rig owners and oil and gas companies affect rig rates. Our econometric framework is a single equation random effects model, in which the systematic part of the equation is non-linear in the parameters. Such a model belongs to the class of non-linear mixed models, which has been heavily utilised in the biological sciences.
Subjects: 
rig rates
oil and gas drilling
oil and gas prices
JEL: 
C18
C23
L14
L71
Q40
Document Type: 
Working Paper

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