Dayrate contracts have been the normal mode for drilling operations for a long time. The environment is well known and therefore comfortable to the participants. The operator retains control over all aspects of the operations; essentially the operator leases men and equipment.

Turnkey contracts have been regularly utilised in the USA and have been used to a limited extent internationally. In their simplest and purest form they provide an understandable and usually clear assignment of responsibility to the contractor.

Dayrate contracts provide little incentive to perform, are professionally unrewarding to contractors' personnel and presently do not offer a profitable return on investment in most sectors.

Turnkey contracts, by contrast, provide a significant incentive to perform, are professionally rewarding to contractors' staff and can provide an environment whereby the contractor achieves a more profitable return on investment whilst the operator reduces well costs. Unfortunately, the application of the non variable turnkey contracts used today has been limited due to their inability to handle uncertainties and a reluctance of the industry to adopt this form of contracting.

As a result a significant movement has arrisen towards contracts which fall between the well known dayrate situation and the non variable turnkey.

This is the twilight zone – an ill defined region of major contrasts in control, responsibility, accountability and price. A region which requires thought and development to provide the mechanisms for successful contracts. A region through which the way forward to more meaningful contracting is being developed. The structure and orientation for contracting drilling operations in the twilight zone is developed in this paper.

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