Need evidence that the U.S. land-drilling market is in the midst of transformation? Three domestic land drillers revealed their intent to retire 157 rigs from the U.S. land fleet, during their third-quarter earnings calls.

Those old land rigs aren’t just fading away; they are being scavenged for parts with the remainder cut up for scrap. A majority are conventional mechanical rigs during a time when the emphasis is on newer technology rigs in fit-for-purpose configurations as the industry expands unconventional drilling techniques to all facets of domestic oil and gas drilling.

The size of the retirement is notable. Through second-quarter 2011, North American drilling contractors had announced a combined 215 newbuild rigs for the U.S. market, including a jaw-dropping 77 newbuild announcements in second-quarter 2011 alone.

Apparently, what one hand giveth in the market the other taketh away. New-build announcements destined for the U.S. market so far in the third quarter total just seven, including three by Nabors and four for the U.S. division of Canada’s Precision Drilling.

It took 21 months to get to 222 newbuilds, but only seven days to eliminate 157.

The quarterly pace of newbuild rigs has been of interest as an indicator of future developmental programs in unconventional plays. Contractors had been unveiling newbuild land rigs at a pace of roughly 25 to 28 units per quarter since the industry recovered in January 2010.

But second-quarter 2011 blew out expectations, with 77 new-build announcements.

At the time, the question was whether the 77 units signaled a step-level change upward in the domestic fleet retooling effort, or whether it simply reflected operators’ planned 2012 drilling efforts as unconventional plays moved from delineation and optimization into the manufacturing stage of development.

While there is still ground to cover among contract drillers who at press time had yet to announce earnings, it appears that the flood of newbuilds in the second quarter may be a one-off event for the time being. And, if that’s the case, the 157-unit reduction in the domestic onshore fleet from rig retirements lends credence to the argument that newbuild rigs are displacing older units.

Further, additional retirements are likely as new rigs employed in pad drilling configurations will generate larger volumes of hydrocarbons per rig versus their conventional peers. Also, the trends suggest a modicum of stability in rig count, since newbuilds are typically commissioned under multiyear take-or-pay contracts and thus reflect operators’ focus on efficiency, scale and cost on a program basis, rather than a simple reaction to commodity price.

The development also reflects a revolutionary change in the nature of onshore drilling, which has witnessed the diffusion of unconventional technologies such as horizontal laterals and multistage fracture stimulation into traditional settings, necessitating equipment with greater hoist capacity, larger hydraulic horsepower, and automation packages that shorten cycle time at the well site.

Specifically, Nabors Industries, the world’s largest drilling contractor by fleet size, announced the retirement of 104 rigs, including 53 previously marketed units from the fleet. All but seven of the units were conventional mechanical rigs. The company recorded a $63.2-million charge in third-quarter 2011 to decommission the land rigs.

That news was followed a day later when Patterson-UTI Energy announced it had retired 22 units during the third quarter. The Patterson UTI announcement follows news in the first quarter that it was upgrading and re-activating previously stacked rigs to meet growing demand in places like the Permian Basin.

Meanwhile Union Drilling Inc. announced it will auction 31 drilling units, including 19 decommissioned rigs. Some of the equipment may be returned to the market under new ownership, though the vast majority of Union’s outcasts will serve as a source of spare parts for the existing domestic land fleet.

Overall market commentary remains bullish among the handful of land contractors who have reported to date.

That commentary stands in stark contrast to the pressure pumpers, who have transitioned from robust outlooks several months ago to more cautious expectations for 2012.

Pressure pumpers reporting to date have lost some of their market swagger as they describe flat pricing scenarios in the domestic drilling arena, including the first admissions that pricing for well stimulation has retreated in some dry-gas areas.

Further evidence of a domestic market in the midst of a transformation is evident in other metrics. In October 2008, the top four states for rig count were Texas (941 rigs), Oklahoma (190), Louisiana (127), and Wyoming (122). At the end of October 2011, they were Texas (724 rigs), North Dakota (159), Oklahoma (151), and Pennsylvania (112).

In addition, the Haynesville is now following the path of the Barnett shale. Rig count in the Barnett topped 180 units in 2008, but has tallied less than 60 in five of the last eight weeks.

Similarly, the Haynesville rig count in the four core north Louisiana parishes exceeded 120 units during second-quarter 2010 but has now fallen to 70 units or fewer in recent months, as operators finish up acreage capture programs.