Case Synopsis

In the offshore oil drilling industry, producers typically focus on the early stages of exploration of new resources of oil and gas. Some producers also drill and extract these resources themselves, but many outsource this activity to drillers. Pacific Drilling, founded in 2006, was one such driller. But unlike competitors, which often utilize all three types of rigs for different drilling environmentsjack-ups for shallow drilling, semi-submersibles for somewhat deep water, and drillships for ultra-deepwater (UDW) drillingPacific Drilling specialized in drillships for UDW environments.

Pacific Drilling began as a joint venture, and start-up costs were high due to the advanced technological equipment involved. Christian Beckett was brought on as CEO and first employee, and from the beginning he envisioned a company that would do things differently. He intended to use the latest technology to disrupt the industry by being more efficient and safer, which would result in cost savings for customers. He was also determined to leverage innovations in oil drilling technology. For example, Pacific collaborated with its first and most important customer, Chevron, to utilize an as-yet-untried invention called dual-gradient drilling (DGD), which would allow Chevron to tap resources that had previously been considered "undrillable." Perhaps most important, Beckett created an organizational culture that emphasized consistency, quick decision making, accountability, and an entrepreneurial mind-set.

Landing the first account with Chevron took at least six months of negotiating, but it was essential in getting other producers to trust the new firm. Pacific developed an excellent, "seamless" working relationship with Chevron, but some potential customers later saw that as a drawback, believing that Pacific would not be able to work with other firms. Fortunately, enough other clients booked Pacific's services, and the firm was able to weather the economic crisis of 2008.

That downturn, however, turned out to be the early stages of an ongoing slump for Pacific and its competitors. The oil drilling business has been subject to peaks and valleys for decades, but there has been a steady downward slide since 2014. The price of oil since 2014 has rapidly declined, decreasing demand, and that has been coupled with a surplus of drilling rigs competing for the small amount of drilling business that's left. With a heavy debt load on its balance sheet, Pacific Drilling was in serious financial trouble.

Please read Case 11(C-147) part 4, case studies "Pacific Drilling: The Preferred Offshore Driller" and answer the following questions

Please provide at least three (3) peer-reviewed resources in support of your arguments.

1. Provide a summary of the case as introduction
2. Why offshore drilling?
3. Offshore drilling typically used three types, what are the three types of offshore drilling?
4. What was the reason for the fall of the company's stock in 2014? Was the fall of the company's stock related to the movement of Global Oil prices?
5. Was collaboration with Chevron a wise move for the company?
6. What were the challenges:
   1. Competition in the market including the supply of shale oil,
   2. Technological challenges, and
   3. Dealing with fluctuations in the international oil prices