December 7, 2016 / 8:56 PM / 10 months ago

Pioneer Energy to sell rigs as part of fleet modernization strategy

(Reuters) - Land rig provider Pioneer Energy Services (PES.N) will sell two of its rigs next week as part of a move to decrease its exposure to older electric rigs, Chief Executive Stacy Locke told Reuters on Wednesday.

Pioneer, like other U.S. rig contractors, is banking on newer electric “walking” rigs, demand for which has held steady despite a near 53 percent slump in U.S. oil prices Clc1 since mid-2014.

Such rigs can “walk” across drill pads, moving from wellbore to wellbore, unlike a regular rig that has to be taken apart and reassembled for each move, saving shale producers time and as much as a third of well drilling costs.

Pioneer Energy’s fleet includes 16 such walking rigs that have alternate current (AC) motors, of which 13 are currently contracted.

The company expects to put the rest to work in the next 3 or four months, Locke said.

“We are focusing our effort strategically on pad optimal AC powered rigs for the shale plays across the U.S. where we know we can maintain high utilization and the highest dayrate available in the market,” he said.

In response to the fall in oil prices, Pioneer Energy and other rig providers have stacked, or idled, several rigs, besides earmarking for sale legacy rigs that have fallen out of favor with producers.

Pioneer Energy, which sold one of its older rigs last week, expects to raise $6-$8 million from the sale of the two legacy rigs, leaving it with four rigs for sale in the United States.

The company is in discussions to sell some or all of its eight rigs in Colombia, four of which are expected to be put to work by the end of the year, Locke said, adding that a deal was not imminent.

“We could use that capital here in the United States. We are not of the size where an international expansion make sense for us,” he said.

Shares of the San Antonio-based company have more than tripled this year.

Reporting by Arathy S Nair in Bengaluru; Editing by Swetha Gopinath and Shounak Dasgupta

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