Mobile offshore drilling units (MODUs) are a critical element of the offshore oil and gas industry. Drilling rig markets have a large geographic expanse and are economically important with large labor impacts. The purpose of this report is to describe the MODU industry and the economic impacts of rig construction in the U.S. We emphasize dayrates in the service market and capital expenditures in the newbuild market because these are primary metrics and basic indicators of the industry. The industrial organization and major players in the contract drilling market are described and business strategies among contractors illustrated. Dayrates in the contract drilling market are analyzed and hypotheses regarding dayrate factors are tested. The major shipyards in the newbuild market are described along with the geographic distribution of construction and the status of the market circa 2011. A brief description of the processes of jackup rig construction is provided, including design tradeoffs and the drilling equipment installed. The construction costs of jackup rigs in the U.S. are analyzed and the labor, equipment, and material cost components are estimated. Factors that influence capital costs are discussed and the newbuild and replacement costs of jackups, semisubmersibles, and drillships are analyzed.