Meter Rate Drilling Contracts

Compared to day-rate contracts, it is fair to say that meter rate contracts in deep geothermal drilling are less common.  This has though changed in recent 5 years or so.  While meter rate contracts are dominant in Iceland and to some extent also in Turkey, this has not be the case on other markets.

In this case the drilling contractor receives an agreed lump sum per meter of a well drilled, based on different sections and diameter of the well. One tends to believe that this type of agreement will result in cheaper drilling cost.  But this is not necessary true assumption. In this case the drilling contractor calculates into his price schedule a substantial risk factor of the operations and receives a lump sum payment upon supplying a well down to a certain depth.

Even though this includes a certain risk for the drilling contractor, certain exceptions are usually build in the contract when the drilling contractor encounter unexpected incident related to geological difficulties. In such cases an hourly rates are applicable.  The contractor takes on all risk related to slow drilling that may delay the drilling work. 

For the drilling work in meter rate contract two unit prices are applicable:

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram