Tracking the Lesser-Known Frac’ers

by Matthew Johnson

Frac’ing has not been dominated by the big names you might expect. The costly technique was driven to prominence by independent producers that had to find a way to do business profitably in the United States. This is evident when you look at data on the active pressure pumpers and well operators in the United States.

Don’t Overlook Smaller Pressure Pumpers

A typical hydraulic fracturing pumper unit includes a large engine, pump, and control panel that are mounted on a truck or trailer. The pumper is part of a frac spread typically run by a well operator that includes storage tanks and additive mixers. Major well operators like Chevron and XTO/ExxonMobil hire a number of pumpers, but they tend rely heavily on the big names: Halliburton, Baker Hughes (soon to shift to the new entity BJ Services), Schlumberger to name a few. This chart below shows just how active Halliburton is:

Frac Spread Count for BAKER HUGHES

Independent operators do not hire as many pumpers, but they tend to be more diverse in their hiring. Anadarko, for example, also utilizes the pumping services of Trican, Calfrac, FTSI, Universal, and Nabors. Pioneer Resources is a bit of an outlier in the operating world, because they’re vertically integrated.

A frac’er to watch: Keane

One smaller pumper that is worth keeping an eye on is Keane Group Inc. The company is based in Houston and run by alumni of some of the major service companies. It is currently in the midst of an initial public offering that could be worth as much as $287.5 million, and it will lead to the company being listed as “FRAC” on the New York Stock Exchange. Keane is owned by a New York-based, private-equity firm called Cerberus Capital Management, and that has allowed Keane to stay well financed during the current downturn.

Keane Group reported in a recent filing that it has 944,250 horsepower behind 23 frac’ing spreads and wireline trucks operating primarily in the Permian, Marcellus, and Williston Basins. Other reports say that 13 of those frac’ing spreads were deployed as of November 30, 2016. Data collected by Primary Vision shows a maximum of seven Keane-branded spreads active at any one time during the past 12 months.

Frac Spread Count for KEANE

Some of the discrepancy is likely due to the fact that Keane doubled in size in 2016 through the purchase of the U.S. operations of the Canadian service company Trican. Keane seems to be counting some of its spreads while they were still branded as Trican, and some downtime is inevitable during a merger. Looking forward, Keane says it will use proceeds from the IPO to repay debt and create working capital, and it is possible the company is positioning itself to buy additional equipment as the market turns upward. Does it make sense for Keane Group to step in and purchase Weatherford’s pressure pumping division?

This Data And More From Primary Vision

If you want to be successful in the frac’ing business, it helps to know what the pumpers are doing. Primary Vision’s new National Frac Spread Count Report can provide both top-line data on the industry and detailed data on specific companies and markets. We have collected data from a range of public and private sources and then augmented that data with our own analysis to provide a clear picture of the hydraulic fracturing happening in the United States and Alberta, Canada. To learn more, visit www.fracspreadcount.com or contact us at info@pvmic.com.

sources:

Disclaimer

The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

Rig Counts vs. Frac Spreads vs. Frac Jobs

by Matthew Johnson

When you are trying to decipher what is going on in the oil field, getting your terminology right is important.  Analysts looking at unconventional oil and gas production have a few metrics that are updated frequently, lets go over them one by one.

Rig Counts

Perhaps the best-known number in the oil business is the Baker Hughes rig count.  Baker Hughes is an oil field service company that has been issuing counts of active drill rigs since 1944.  To be “active,” a rig must be on location and turning to the right.  In other words, a rig is active from the initial cut into the ground until it reaches its target depth.  A rig is not active if it is just moving between locations, being set up, or being used for a non-drilling activity.  Non-drilling activities can including testing, workovers (which can include running a drill through an existing well), and completions (preparing an already-drilled well for production).

The Baker Hughes rig count is a prized data point because it provides a rough proxy for the amount of drilling being done at a particular time.  Analysts from all corners of the industry use the data to predict things like future production and drilling equipment needs.

Frac Spreads and Frac Jobs

A frac spread is the collection of equipment needed to hydraulically fracture a well.  This typically includes a combination of pumps, data trucks, storage tanks, chemical additive units, and blenders.  Frac spreads (and sometimes they are referred to as Frac fleets) conduct frac jobs.  A frac job typically takes a handful of days, and involved pumping fluids down a drilled well at a high pressure to fracture the rock below to allow oil and gas to flow into the well.  Frac’ing fluids typically include sand, which acts as a “proppant” to keep the fractures open.  After years of explosive growth, The tOTAL Number of frac jobs have slowed down over the last two years.  2017 looks to reverse the recent trend as operators try to lock in the recent crude market upswing.

Frac-Jobs-in-United-States-in-the-last-3-years

Frac Jobs in United States in the last 3 years

In a sense, a count of active frac spreads and frac jobs is very similar to an active rig count.  The numbers do not always align, however. There has been much talk since the recent downturn about the “fraclog,” for example.  This is a backlog of wells that have already been drilled but have not yet gone through the costly frac’ing process.  A company that sells proppant sand, for example, should be far more interested in the number for frac jobs than the number of active drilling rigs.  As you can see in our chart that compares the two data points, counts of active rigs and active frac spreads don’t always follow each other.

National Frac Spread Count + Rig Count for UNITED STATES

National Frac Spread Count + Rig Count for UNITED STATES

National Frac Spread Count Report

The challenge with counting oil and gas industry activity is that the companies involved are not always particularly forthcoming.  Widespread frac’ing is also a relatively new phenomenon, which makes it difficult to track and predict.  Companies are often required by regulators to submit data about their frac’ing activities on a quarterly basis, so robust data is usually available but lags behind current conditions by many weeks.  In order to provide a useful count of active frac spreads and frac jobs, Primary Vision has developed a proprietary technique for collecting available data and utilizing modern math models, advanced cross-validation algorithms, and artificial intelligence to estimate frac’ing activity.

After many months of perfecting our models, Primary Vision is now providing customers with a weekly Frac Spread Count Report.  It provides a combination of important top-line data with granular activity details that can be invaluable to industry players.  You can subscribe to our report at www.fracspreadcount.com.  If you have questions about our products or would like a demonstration on how they can help your business, please feel free to contact us at info@pvmic.com.

Disclaimer

The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

Introducing the National Frac Spread Count

FSC-logoby Matthew Johnson

Oil prices are inching upwards, and if you want to make the most out of the opportunities in unconventional oil and gas production you need to know the lay of the land.  Primary Vision has just the product for you.  We leveraged our computing, qualitative analysis, and artificial intelligence capabilities to create an encyclopedia of frac’ing data on operations across the continental U.S. and Alberta, Canada.

Primary Vision Background

Our market intelligence and counseling company has been supplying data and data derivative products to the oil and gas industry since 2012.  We strive to give our customers the information they need to find markets, lower their costs, and raise their revenues in this challenging marketplace.  Our customers come to us to know what is happening in the oil field, and we give them a range of value-added data on the use of water, proppant, and chemicals in hydraulic fracturing.  Oilfield data is, of course, invaluable to upstream companies but it also impacts companies throughout the value chain.

That is why our Products have been trusted by leading companies from a diverse range of sectors, including Schlumberger, BP, Bloomberg, Shell, PWC, Phillips, HSBC, Cameron, Honeywell, XTO, EOG, and DuPont.  Proppant companies have used our reports to gain intelligence about their market, hedge funds have used our data to augment their own analysis of publically-traded companies, and private equity firms have used us to study a handful of Permian Basin counties for future investment.

Methodology Behind our Latest Report

In developing our reports, we target only the richest oil and gas data sets.  Our software tools and validation process are proprietary, but we can say that we rely on collecting a broad swath of industry reports, regulatory filings, and publicly-released information.  The biggest challenge with this data is that operators and pumpers in most locations make regulatory filings only every 90 days or so, and there is often a delay in that data becoming public.  We strive to close that Data lag with our own predictive model.

Our model relies on collecting data from a range of industry sources and rigorously testing it through business rules and logic to ensure our data sets and forecasts are as accurate as possible.  Our proprietary system was developed by a team of leading crude oil analysts paired with professors at Oxford University.  We are using modern math models, advanced cross-validation algorithms, and artificial intelligence to constantly test and refine our process.

Along with developing these massive data sets, we work on presenting the data for our clients in the most useful way.  We have charts that combine actual spread data with our predictive algorithm, and we also have charts that break actual data from predicted data.  We find some clients want our best estimate at what is happening and others want to see a breakout of what activity is confirmed.

National Frac Spread Count Report

Our recently-released Frac Spread Count Report is one of the most comprehensive products we have ever Released. Demand has been off the charts, as we combine easy-to-read top-line charts with more than 400 pages of more granular data.  You can subscribe to our report at www.fracspreadcount.com.  Subscribers get both a weekly update on the frac spread and access to historical data.  If you have questions about our products or would like a demonstration on how they can help your business, feel free to contact us at info@pvmic.com.

Holiday Presents to Frac’ers

bj--fsc-weatherford-logo

by Matthew Johnson

   It has been a rough couple of years for the oil and gas business.  Oil prices dropped sharply in recent months as America’s boom in unconventional production ran headlong into supply headwinds, but the once-mighty Organization of Petroleum Exporting Countries has done American producers a favor this time.  On November 30 the group announced its first cuts in eight years which would reduce its production by about 1.2 million to 32.5 million barrels per day.  The cuts were something U.S. oil workers have been hoping for, and oil prices have indeed shot up and set the industry up for a great new year.  Let us tell you about a couple developments we are watching and a potential stocking stuffer for the frac’er in your home.

Baker Hughes Backs Out of the Pressure Pumping Business

  In 2009, Baker Hughes, a GE company, purchased Houston-based BJ Services Co. for $5.5 billion dollars.  B.J Services was an oil and gas services company that traces its roots back to 1872 and by the time it was purchased it was one of the world’s leading providers of oilfield pressure pumping services.  Baker Hughes bought the company to expand its footprint in the frac’ing business, but the deal proved to be a financial drag.  Its frac spreads went from a peak of around 50 in 2015 to just 10 earlier this year, though they have come back some recently.

chart1

Baker Hughes Frac Spread Count Since May of 2015

    Baker Hughes is now in the midst of a merger with a unit of General Electric and on November 29, Baker Hughes announced it was spinning off its BJ Services assets. Baker Hughes is partnering with CSL Capital Management and West Street Energy Partners to create a “pure-play North American land pressure pumping company” known as the new “BJ Services.” It will be interesting to watch how aggressive Halliburton and Schlumberger are in trying to snap up more market share away from this new entity.

Signs of Rock Bottom for Weatherford

   Weatherford International has taken the downturn especially hard.  Back in April 2015 the company kicked things off with 10,000 layoffs and 60 facility closings.  The company was doing okay in the Middle East, North Africa, and Asia Pacific at the time, but its North American assets were hemorrhaging money.  By October 2015, the company was ratcheting up to laying off 14,000 worldwide after its revenue was cut almost in half from $3.9 billion in the third quarter of 2014 to $2.2 billion in the third quarter of 2015.  By November 2016, the company’s CEO Bernard Durok-Danner was out of a job, leading to a 33% spike in the company’s stock price.  He was blamed for over leveraging the company to the point where it could not handle its debt after an oil price decline.

   Now, new CEO Krishna Shivram has been scaling back its frac’ing operations and may get out of the frac’ing business entirely.  If true, that will be a boon for the remaining service providers.  The company’s frac spread count cratered in the downturn and has been hovering below ten for most of the year.  The company may have arrived at a point where it decides to focus on other parts of its diverse portfolio.

chart2

Weatherford Frac Spread Count Since May of 2015

Get Your Primary Vision Frac Spread Count Report

   If you want to make money in the oil business right now, you need to know who among these battered rivals will rise from the downturn to take advantage of OPEC’s gift. Halliburton remains dominant at ~34% of the pressure pumper market, while Schlumberger sits at 12%. Baker Hughes 9% market share will presumably all go to the new BJ Services while Weatherford’s 5% appears to have an uncertain future.

A portion of a chart that covers pressure pumper market share from our Frac Spread Count Report.

   You can be the first to know what happens with our inaugural Frac Spread Count Report. We have been tracking onshore frac’ing activity for five years and now we are releasing our first report about active operators and pressure pumpers in the lower 48 states and Alberta, Canada. It is over 500 pages long and includes the count plus our expert forecasting, analysis, heat maps, details on regional activities, and charts on Permian Basin action. We also list out the top operators, service companies, and active counties.

You can GET the report today at: www.fracspreadcount.com

Questions? Email us at: info@pvmic.com

sources:

Disclaimer

The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

Does #Exxon Know The Value of Its Assets?

by Matthew Johnson

In recent months, ExxonMobil has been under fire after investigative reporters claimed the oil and gas giant knew about risks associated with climate change since at least the 1970s and hid that knowledge from the public.  Leading environmental groups called for the company to be prosecuted the way tobacco companies were prosecuted for hiding Smoking risks.  Mainstream politicians like Hillary Clinton joined in and New York Attorney General Eric T. Schneiderman launched an investigation.  In March 2016, attorneys general from 18 jurisdictions announced they are now part of his effort. In September 2016, the Wall Street Journal reported that AG Schneiderman had changed his aim and is now looking more closely at how Exxon values its assets.  The federal government has also launched a similar effort.

In addition to climate questions, the government wants to know if Exxon is hiding the damage it has suffered from low oil prices.  As our proprietary data shows, frac jobs decreased 50% from Q42015 to Q12015, and that foretold a corresponding drop in production and cash flow.  ONE THING TO NOTE IS THAT PRIMARY VISION’S DATA FOCUSES ON NORTH AMERICAN FRAC’ING AND THE MAJORITY OF EXXON’S BUSINESS IS INTERNATIONAL/OFFSHORE.

The Good:

First off, ExxonMobil is a pillar of American industry that traces its lineage back to the Standard Oil Trust that dominated world oil markets in the late 1800s.  The company has survived a lot of legal issues in its past, and when crude markets rebalance (or if OPEC is able to boost oil prices) then Exxon’s troubles may disappear.
This particular controversy has to do with the process executives use to sign off on calling reserves “proven” after reviewing data from engineers, geophysicists, and geologists.  Dropping oil prices and costly regulations reduce the value of these “proven” resources.  Most companies will write down that lost value, but write-downs reduce profits.  Exxon is notorious for refusing write-downs.  Exxon CEO Rex Tillerson sees this aversion as a good part of the company’s culture.  He says it avoids write-downs by placing a high burden on executives to ensure that projects can work at low prices.  Those executives will not be “bailed out” by having their projects written down in a bad market.

One thing that helps make this strategy viable for Exxon is that its operations are heavily centered in areas that continue to be economic at current prices.  In particular, this means the Permian Basin in Texas, and through it subsidiary XTO Energy the company also reaches the Williston Basin in North Dakota.  Our data shows these to be the most popular locations for frac jobs in recent years.

The Bad:

The flip side here is that Exxon could be seen as lying about the cost of climate or its losses associated with low oil prices.  The company has outperformed many of its rivals since oil prices began to drop in 2014, but it has lost money in its U.S. drilling business for the past six quarters.  By failing to admit that their reserves had lost value, Exxon was able to report higher earnings than rivals that made significant write-downs.  Some may say the company inflated its earnings to boost its stock price.

The Ugly:

Exxon is now facing two different investigations with overlapping aims.  First, New York AG Schneiderman and his coalition are pursuing allegations of fraud related to climate change.  AG Schneiderman also appears to be independently reviewing Exxon’s practices related to writing down assets and accounting for the cost of climate change.  Second, the U.S. Securities and Exchange Commission has now opened up an inquiry into the same issues of write-downs and climate accounting.

Conclusion:

Exxon has been on the attack against AG Schneiderman and what the company views as a politically-motivated attack, but Exxon has said the SEC is the “appropriate entity” to look into these matters.  Exxon is proud of its practices and it will likely hold up against government scrutiny as it has for decades.  History suggests commodity prices will rise again, and when they do Exxon’s troubles will seem minor.  Moreover, these investigations were just a chink in Exxon’s armor.  Stock prices took only a small dip after the SEC investigation was announced, and analysts like The Street Ratings still consider the stock a “hold” as the company is in a solid financial position despite weak cash flow and poor profit margins.

sources:

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

Pioneer’s A+ game might match OPEC

PXD-PVby Matthew Johnson

Recently, we reviewed some pressure pumpers and even took a stab at Eog Resources (EOG: $91), often called the Apple ($108.27) of U.S. shale.  If Eog Resources is the Apple of U.S. Shale then is Pioneer (PXD: $224) the Uber-equivalent?  Their CEO, Scott Sheffield, stated last week that their operating costs in the Permian Basin were close to $2 per BOE. Some have disputed this by looking deeper into their financials.  Let’s take a look at what we’re good at which is frac jobs and frac spreads.

We’ve reported 440 frac jobs since the beginning of 2015 running through Q1 2016.  PXD has shown a steady flow of work.

FSC Charts for PXD - comparisonFSC Charts for PXD - month by month

Pioneer is vertically integrated, so they do a lot of their own pressure pumping. However, we are tracking some activity with Halliburton (HAL: $43.84), Baker Hughes (BHI: $49.76) and Schlumberger (SLB: $81.20) in the last 18 months.

Here’s their top ten frac jobs by county since January of 2015:

FSC Charts for PXD - top 10 countiesThe majority of their activity takes place in Midland (Permian), Upton (Permian) and Karnes (Eagle Ford) counties.

Pioneer has been a technological leader in many aspects of frac’ing including well selection, pressure pumping  and refrac’ing.  The inclusion of their own pressure pumping team gives them a logistical and financial advantage over 90% of E&Ps in the United States.  Even if their CEO is exaggerating, it appears as their operational costs have shined a light on investors (their stock is up 40% since January of this year) and other shale companies that the impossible is, in fact, possible.  If OPEC’s goal was to knock U.S. shale offline they may have won some battles, but companies like pxd are tenacious.  The war is far from over.

sources:
Arthur Berman at oilprice.comPioneers $2 Operating Costs: Fact or Fiction?
Rachel Aldrich at The StreetPioneer Natural Resources Stock is the ‘Chart of the Day‘”
Nicholas Chapman at Market RealistAnalyzing Pioneer Natural Resources Q216 Earnings

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

EOG is white hot!

EOG-Resourcesby Matthew Downes

Since January 20th, EOG Resources (EOG: $90.24) stock is up 50%.  We’re gonna look a bit deeper into this E&Ps activity levels and provide some additional analysis.

In the chart below we analyze their frac jobs from 2015 to current.  Since January of 2015 EOG has performed close to 700 frac jobs. It has the appearance of a roller coaster ride, but further analysis will show you that this is a company who squeezed every dollar and leveraged their technology for every single frac job. Patience and target well selection were key factors in 2015.

FSC Charts for EOG - comparisonMonth by Month:

FSC Charts for EOG - month by monthOver the same period EOG primarily worked with 4 pressure pumpers (in order):
1. Pumpco, a division of Superior Energy Services (SPN: $16.76)
2. Halliburton (HAL: $43.91)
3. Universal, a division of Patterson-UTI, Energy Inc. (PTEN: $19.77)
4. Baker Hughes Inc. (BHI: $47.71)

One more chart we thought was interesting to follow was their activity by county and state.

FSC Chart for EOG - top activity by counties

The majority of their activity takes place in Gonzales and La Salle counties in Texas.  This chart reflects activity in New Mexico, Texas, North Dakota and Wyoming.

The oil patch has seen a rash of bankruptcies over the last 24 months as the result of a downward pricing cycle. While you’d think this would be a company motto for all operators, EOG is targeting premium drilling properties with an after-tax rate rate of return of 30% which is outstanding. In a recent Forbes article they polled 18 analysts with 44% of them recommending a strong buy.

Frequently referred to as the Apple of all oil and gas, do you think EOG can continue to improve while the Oil markets fully recover?

sources
Bruce Kamich of The Street “EOG Breaks Out of an Impressive Base Pattern
Dividend Channel on Forbes “EOG Cross Above Average Analyst Target
Erwin Cifuentes of OilPrice.com “EOG Resources Boosts Fracking Plan by 30 Percent

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

The End is the Beginning for Baker Hughes

The-End-Is-the-Beginning-Baker-Hughes-Primary-Vision-Blog-7-29-2016by Matt Johnson

Over the last week or so we’ve covered the Q2 results for Halliburton (HAL: $42.77), Schlumberger (SLB: $79.05) focusing on the good, the bad, the ugly and accompanying activity measurements. Today we will center in on Baker Hughes (BHI: $46.05) which reported its Q2 results on July 28th, 2016.

Just a reminder that, Primary Vision focuses on frac data and therefore will highlight (and probably lowlight) BHIs pressure pumping activity.

The Good: As a result of the $3.5b breakup fee paid by HAL, BHI has already earmarked a 1.5b share buyback program and $1b in debt repayments. Due to recent job cuts and other internal restructuring they’re expecting their margins to improve throughout the rest of 2016.

Water Volume – BHI was #3 in water usage in 2013 and 2014.  They slipped to #4 in 2015 and round out 5th place, so far, in 2016. Just an fyi: The running order of water usage from 2013 to current (from 1st to 5th place): HAL, SLB, FTS International, Pioneer Natural Resources (PXD: $157.54) & BHI (this water usage list only has Pressure pumpers, and while PXD is known as an operator they’re also vertically integrated with their own frac spreads which enables them to control costs on a whole other level.  Read here to learn more).

Proppant Volume – BHI had the 2nd highest proppant mass from 2013 to 2015.  2016 numbers are still a bit murky.

Total Number of Frac Jobs: In 2015, BHI held second place with 1,643 frac jobs.  Through one quarter of data they’ve slipped to 3rd place.  In 2016, HAL holds on to first place, one can only wonder if BHI will ever re-gain enough market share to move back to #2. See the charts below that highlights BHIs frac jobs over the last 5 quarters.

BHI comparison chart

The Bad: While the merger breakup resulted in a $3.5b payout from HAL, BHI lost crucial market share in the oilfield services space.  Revenue fell 39% to $2.3b and BHI failed to cut costs in line with their competitors.

The Ugly: BHI has laid off ~23,000 people since the beginning of 2015.  One might wonder who really suffered as a result of the failed merger.

We took a deeper look into our database of frac jobs (~120k jobs in the U.S. over the last 6 years) to Show both the Frac jobs and Frac Spreads for Baker Hughes.

BHI frac jobs month by month

Note: The Q2 2016 data is incomplete as there is a lag in the data of ~100 days

BHI forecasting chart

Note: There is a lag in the data of about ~100 days. We continue to capture new data every single day (Running Frac Spreads = blue) and compliment the data lag with our custom forecasting algorithm (Forecast = orange). If you click on the chart you will better be able to see the chart labels.

Parting Thoughts:

BHI thinks sustainable crude pricing in the $60 range is needed for operators to increase pumping activities in North America. When speaking about near-term opportunity, BHI is looking to take advantage of the 5,000 uncompleted wells nationwide. Even with the negative outlook in 2016, CEO Martin Craighead said “We are well positioned for opportunities today and when (the) market begins to recover.

Their CEO isn’t being passive either as they plan to release a host of new products focused on technology and uplift to bolser their bottom line in the second half of 2016.

It will be really interesting to follow their next few quarters as they streamline and try to re-grab the market share they lost.

sources

Amrutha Gayathri of ReutersBaker Hughes says North America recovery unlikely this year
Tess Stynes of The Wall Street Journal via Market WatchBaker Hughes Loss Widens on pricing pressure
Claire Pool of The StreetBaker Hughes Reports Loss, Paints Rosier Picture for Second Half of 2016

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

Big Blue: Schlumberger 2016 Q2 Comments and more

Big-Blue-Schlumberger-Q2-2016-Comments-And-More

by Matt Johnson

Last week we covered Halliburton’s (HAL: $43.21) Q2 results and we’ll follow up this week with a similar look into Schlumberger’s (SLB: $81.16) second quarter.

Primary visions database is hyper-focused on frac data, so its important to note that while our comments are about their entire Q2 results our data features SLB’s U.S. pressure pumping activities.

The Good – SLB approved dividends of .50c per share and maintains a positive outlook that we’re at the bottom of a downward cycle.  SLB is the worlds largest oilfield service provider, however they are the second most prolific pressure pumper in the U.S. when analyzing active spreads and total frac jobs. CapEx is expected to stay unchanged at $2.2b. SLB has been aggressive in keeping its margins stable vs. the competition and continues to renegotiate long-term contracts that aren’t financially viable.  Asking never hurts.

WATER VOLUME – SLB was #3 in water usage in 2013, #2 in 2014 and 2015, and so far remains in the #2 spot in 2016.

PROPPANT MASS – SLB was #4 in proppant mass in 2013, #3 in 2014 and #4 in 2015. 2016 is a bit muddy right now, no pun intended, as HAL maintains the #1 spot, yet 2nd through 5th place are tight. We’re paying close attention to this as our clients are hungry for proppant data.

TOTAL NUMBER OF FRAC JOBS – In 2015, SLB firmly held 3rd position with over 1,300 frac jobs. So far in 2016 they have moved up a spot to #2.  See this chart below that highlights SLBs total frac jobs in the last five quarters.

FSC comparision Chart for SLB

The Bad – SLB suffered Year over Year declines in revenue and net income as the demand for pressure pumping activities contracted.  They suffered impairments of almost $2b and restructuring charges totaling $646mm.

The Ugly – SLB continued to reduce their workforce by 16,000 people through the first half of 2016 which is a total reduction of 40% since 2014. SLB is on pace to have its lowest year of revenues in the last six years.

The two charts below highlight SLB’s frac jobs and spreads, which are great activity metrics.

FSC month by month Chart for SLB

Note: The Q2 2016 data is incomplete as there is a lag in the data of ~100 days

SLB Forecasting Chart

Note: There is a lag in the data of about ~100 days. We continue to capture new data every single day (Running Frac Spreads = blue) and compliment the data lag with our custom forecasting algorithm (Forecast = orange). If you click on the chart you will better be able to see the chart labels.

Interested in learning more about the Primary Vision Frac Spread Count or what a frac spread is? More information here.

Completing the merger with strategic partner Cameron

SLB merged with a powerful ally in oil and gas equipment manufacturing last year in Cameron.  The realization of this sale was completed in the second quarter of 2016.  Cameron “is a leading provider of flow equipment products, systems and services” to oil and gas and will help move SLB into the next generation of completion and production services.  Cameron already had a strategic alliance with SLB and looks to strengthen that bond to SLBs core business as the companies integrate with one another through the rest of 2016.

Baker Hughes (BHI: $44.07) results are expected this Thursday and will be featured in our next blog.

sources
ReutersSchlumberger posts unadjusted Q2 loss, cut another 8K jobs
Carl Surran of Seeking AlphaSchlumberger posts unadjusted Q2 loss, cut another 8K jobs
Zacks.com from NasdaqSchlumberger (SLB) Q2 Earnings Fall Y/Y on Weak Activity
Liam Denning of BloombergFor Oil’s Future, See Schlumberger

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings. Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

The Big Red Mothership: Halliburton 2016 Q2 Comments and more

HAL-Q2-Comments-2016

by Matt Johnson

Halliburton (HAL: $44.28) reported its 2016 second quarter results yesterday and things seem to be ok, all things considered.  The majority of this article will focus on their pressure pumping activities in the United States.

The Good:  Halliburton is #1 in multiple categories of U.S. Hydraulic Fracturing.  Their stock has increased over 30% in 2016 and has outperformed their peers.

Being #1 isn’t easy.

WATER VOLUME – HAL is #1 in total water volume (total water used) in 2013, 2014, 2015 and look to stay on top at current activity levels in 2016.
PROPPANT MASS – HAL pumped the most proppant of any service provider in the U.S. over the same three year period.  2016 looks much the same.
TOTAL NUMBER OF FRAC JOBS – In 2015 they fractured the most wells, close to 4,400 in the U.S., almost 3-1 over #2 Baker Hughes who had over 1,600.

Comparision Chart for HALThe Bad: Revenue decreased 43% year over year (Q2 2015 to Q2 2016).  They posted a loss of $3.2b this past quarter (2016 Q2).

t h e   u g l y: Due to the failed merger that was realized on May 1st, HAL had to pay a $3.5b break up fee to Baker Hughes (BHI: $45.71). Venezuela did not pay $148mm in invoices (however HAL did secure a $200mm promissory, terms were not disclosed in the filing) among other impairment charges that approached $425mm. HAL commented that they’ve laid off 1/3rd of their workforce since late 2014.

Those are some 2016 second quarter highlights, or lowlights, depending on how you look at it.  We took a deeper look into our database of frac jobs (~120k jobs in the U.S. over the last 6 years) to Show hal’s activity by Frac job and frac spread.

HAL Frac Jobs month by month
Note: The Q2 2016 data is incomplete as there is a lag in the data of ~100 days.
Forecasting Chart for HAL-1
Note: There is a lag in the data of about ~100 days. We continue to capture new data every single day (Running Frac Spreads = blue) and compliment the data lag with our custom forecasting algorithm (Forecast = orange). If you click on the chart you will better be able to see the chart labels.

Interested in learning more about the Primary Vision Frac Spread Count or what a frac spread is? More information here.

HAL REFRACS
We tracked, presented and reported on refracs in the U.S. last year at multiple conferences and quickly determined that HAL was on the forefront of refrac technology.  While producers and pumpers are still learning and realizing the benefits of refracs, HAL made significant strides in technology, technique and candidate well selection in 2015.  We think refracs are in their infancy and will provide a substantial source of revenue for producers and pumpers in the years to come.  HAL committed themselves to a long-term approach to refracs and as a result will stand tall as producers add refrac programs to their future plans.

As rig and spread counts, as well as crude prices, continue to level the market seems to be headed in a positive direction.  HAL has positioned themselves to be the lean and mean red machine that they can and should be.  They commented that even a modest uptick in the second half of 2016 would reap benefits.  Let’s hope they’re right.

Schlumberger (SLB: $80.60) reports their results today, July 21st.  BHI on July 28th.

sources
Kaya Yurieff of The StreetHalliburton (HAL) Stock Higher After Q2 Results Top Estimates
ReutersHalliburton reports $148 mln loss from Venezuela operations
David Wethe of BloombergHalliburton Sheds More Jobs, Looks to North America Recovery
Natural Gas EuropeHalliburton Reports $3.2B Loss in 2Q
Primary Vision Frac Database
Primary Vision Frac Spread Count

Disclaimer
The data presented above has a margin of error of 5-8% as a result of E&P and/or service company errors or incorrect data filings.  Neither the information, nor any opinion contained in this site constitutes a solicitation or offer by Primary Vision or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.