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to over 20,000 feet. CDC used each of its rigs to drill at least
one well.
On April 26, 1982, CDC settled a lawsuit with Conoco, Inc.,
for trademark/tradename infringement. Under the settlement, CDC
agreed to engage in no business other than contract drilling for
a period of 10 years.
The rigs owned by CDC at the time of the Samson acquisition
were "deep well rigs", which were intended to drill wells deeper
than 12,000 feet. During drilling operations, CDC required its
drilling rig crews to perform periodic maintenance on their
operating rigs consistent with industry practice.
Economic Downturn
Oil and natural gas production is a high-risk business that
is driven by the price that can be obtained for the oil or
natural gas being produced. The boom period of the late 1970's
and early 1980's saw prices for deep natural gas soar from $1.20
per MCF (thousand cubic feet) to over $11 per MCF. As the
difference between deep gas and other gas increased, there was
increased exploration for deep natural gas that resulted in a
dramatically increased demand for rigs capable of drilling deep
wells.
In 1982, the drilling market entered a bust period. The
price for deep natural gas produced from new wells began to drop.
Deeper wells are more expensive to drill, and with the fall in
the prices of oil and natural gas, operators had difficulty in
paying the higher drilling rates necessary to make it economical
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