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to drill with deep rigs. As a result of the decrease in the
price of deep natural gas, the amount of exploration and drilling
for deep natural gas declined sharply. The number of deep
drilling contracts entered into throughout the oil and gas
industry dropped rapidly. Deep well drilling activities led this
decline as the price difference between deep gas and other gas
narrowed.
Although there were relatively few deep wells drilled during
1986 and 1987, some operators were willing to enter into new
contracts to drill deep wells, but generally only on terms that
required drilling contractors to bid at rates below their actual
cost or on a turnkey basis, which placed the economic risk of the
drilling operation on the drilling contractors.
On November 3, 1983, CDC began drilling a well that it had
taken over from another company. Due to problems encountered in
drilling the well, it lost money on the job. After it completed
drilling this well in July 1984, the rig was released. After
July 1984, CDC drilled no wells before the Samson acquisition.
After July 1984, CDC employed no rig crews. It was standard
practice in the contract drilling business to lay off rig crews
when a rig was not on a contract and to rehire them when the rig
returned to drilling operations. Experienced rig hands would
have been readily available had CDC obtained a profitable
drilling contract. CDC hired its former toolpushers and rig
supervisors to provide security for its rigs in order to keep
quality drilling personnel readily available to operate the rigs
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