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Whether independent or major, an operator must acquire the
right to drill for and produce petroleum at a particular site. An
operating company does not usually own the land or the minerals (oil
and gas are minerals) lying under the land. It therefore has to buy or
lease the rights to drill for and produce oil and gas from the landowner
and the mineral holder. Individuals, partnerships, corporations, or a
federal, state, or local government can own land and mineral rights.
The operator not only pays the landowner a fee for leasing, it also
pays the mineral holder a royalty, which is a share of the money made
from the sale of oil or gas.
DRILLING CONTRACTORS
Drilling is a unique undertaking that requires experienced
personnel and special equipment. Most operating companies therefore
find it more cost effective to hire expertise and equipment from
drilling companies than to keep the personnel and equipment under
their own roof. So, almost everywhere in the world, drilling
contractors do the drilling.
A drilling contractor is an individual or a company that owns
from one to dozens of drilling rigs. The contractor hires out a rig and
the personnel needed to run it to any operator who wishes to pay to
have a well drilled. Some contractors are land contractors – they
operate only land rigs. Others are offshore contractors – they operate
only offshore rigs. A few contractors operate rigs that drill both on
land and offshore. The contractor may have different sizes of rigs that
can drill to various depths. A drilling contracting company may be
small or large; it may own rigs that drill mainly in a local area or it
may have rigs working all over the world.
Regardless of its size, a drilling company's job is to drill holes.
It must drill holes to the depth and specifications set by the operating
company, who is also the well owner. An operating company usually
invites several contractors to bid on a job. Often, the operator awards
the contract to the lowest bidder, but not always. Sometimes a good
work record may override a low bid.

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