The use of incentive contracts in the drilling industry has become more common over the past few years. The introduction of performance related remuneration has developed for several reasons, the prime one being an effort to reduce overall drilling costs through increased efficiency. Another significant reason has been the operators desire to have their personnel concentrate on their core business which is finding and marketing oil.

This paper reviews the experience to-date and offers comment, from a drilling contractor’s viewpoint, on the types of incentive contracts presently in use. Discussion covers all phases from bidding to operation at the rig site. In particular certain work undertaken in France and Africa is discussed. The full range of incentive contract types are described, and the required change in attitude from the drilling crew is explained in order to allow successful completion. The need to maintain the correct approach in terms of safety and environmental awareness is also outlined..

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