Over the last five years, the drill rig rental market has been on the rise and some may be surprised to learn that the COVID-19 pandemic has not slowed this market at all.
Where some industries, like hospitality, were forced to close across numerous lockdowns, the majority of drilling jobs continued. Some construction sites did not close at all and so our rigs remained on hire throughout 2020 - and for those that did close, it was not too long until all sites were open again and work continued apace.
Covid did, however, impact business confidence; against the backdrop of redundancies, furlough and business closures, according to the Office for National Statistics, the monthly decline in GDP in April 2020 was three times greater than the fall experienced during the 2008 to 2009 economic downturn. The uncertainty of what was to come caused many customers to delay purchasing new machines and, in some cases, this meant they did not have the equipment to be able to carry out the work on larger contracts such as HS2 and the Lower Thames Crossing. This is where many have found hiring a rig instead to be beneficial.
Our customers report that hiring improves their business's cash flow, in paying for the hire on a weekly or monthly basis as capital comes in from clients. Some smaller customers cannot justify purchasing additional rigs based on just one large contract, which is where hire comes into its own.
Rig Services Ltd was established more than 30 years ago and started as a drill rig repair company that solely looked after blasthole drill rigs on open cast mines. All of this changed when we saw a market for hiring out drills and we bought our first Comacchio MC305 drill rig back in 2003. Rig Services was one of the first companies to offer drill rig rental in the UK and this Comacchio, covered by an engineer for servicing and breakdown, was hailed a success.
Over those 18 years, demand for hire has risen drastically and Rig Services has become a market leader for geotechnical and geothermal drill rigs in the UK. By October this year, our fleet will have grown to 25 Comacchio drill rigs, with three engineers on standby for support and servicing.
Of late, demand has been unprecedented and machines that we had out on hire before the UK's March 2020 lockdown are still with the same customers today. Those machines that have been returned, were serviced and sent on to the next customer immediately. In the last year or so, demand has been so high that we have had no rental machines available for weeks at a time, with the odd rig coming back sporadically.
A key trend we have observed is that our larger rigs tend to stay out on hire for much longer than their smaller counterparts, for example, one large rig has been on hire for more than four years on a large infrastructure contract in the south-west.
Since the lifting of England's first lockdown in 2020, as the investment into infrastructure throughout the UK has increased, there has been a sharp increase in demand for drilling rigs, which in turn has seen drill rig manufacturers taking a large influx of orders. However, due to COVID's impact on supply chains across the world, manufacturers are having difficulty sourcing raw materials quickly and cost-effectively. This has caused a slight increase in the cost of drill rigs - and many other things. These price increase in combination with longer lead times have been beneficial to the rental market.
More broadly, the drilling industry is thriving and many of our customers are facing an ongoing struggle to find drill rigs to keep pace with demand. We have plans to expand our fleet to meet this demand and look forward to supporting this fantastic industry into the future.
Nathan Jones is a director at Rig Services Ltd, which is a highly-respected and experienced supplier of Comacchio drill rigs for hire on a weekly or monthly basis with a modern fleet of over 20 drilling machines and pumps
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