Its Official: The Permian is Getting Crushed

     Crude prices have been declining the past few months as there’s a perception of an oversupplied market and added tension in trade talks with China. In October 2018, oil prices did bounce back as a result of OPECs announced 1.3 million bpd cut. Towards the end of the year crude prices witnessed levels below $50 a barrel (including touching a low of $42.53 on December 25) for the first time since October 2017 on signs of an oversupplied market.

WTI Crude prices for the six months year

WTI Crude prices Jan 2018 to Jan 20191

     Falling crude prices have had a direct impact on E&Ps. According to data from Baker Hughes, the rig count has increased from 480 in August 2018 to 488 in January 2019, however completions have since slowed. Operators seem to be hyper-focused on their drilling programs vs. their completion programs through Q4.  This is typical as they aim to reposition their hedges and lock in better terms with pressure pumpers.

     Analysts look at the length of laterals, frac sand quantities per well, and frac stages per well or even count the stimulation crews (aka frac spreads, frac fleets) to analyze production estimates.

     Our metric, the Frac Spread Count, does the latter and we’ve uncovered a slow down in the Permian that recently has taken a turn for the worse.

     The permian basin frac spread count has decreased from 192 (in June of 2018) to 140 (as of January 2019) representing a 27 % decline.

     The overly optimistic number projected by companies during the period of 2014 to 2017 in the Permian basin seems to have not lived up to their expectations. The below chart represents the increase in oil production in the Permian Region from 2009 to 20182.

Permian-Region_Oil-ProductionFSC-for-Permian      According to Schlumberger CEO Paal Kibsgaard, the trend in the Permian basin is similar to the Eagle Ford shale play, which indicates that producers there have run out of new “good rock” and are trying to get every bit from the known sweet spots. In the Permian’s Midland Wolf Camp section, child wells are already approaching 50 percent of new wells drilled3.

     This being said, many operators can hold on with crude prices hovering around $35 though they would be most comfortable in a $45-$50 range per our research. However, this will have an impact on new drilling, the DUC count (drilled yet uncompleted wells) and ultimately the frac spread count. With a 40% drop in crude prices since October 2018 pressure pumpers are being challenged to manage demand in a market where roughly 500 spreads are ready to work.  We’ve seen frac spread utilization go from over 90% to under 80% in less than a year.  Frac spread utilization will be challenged and from our research frac spread capacity is scheduled to increase throughout the year as pumpers tie their futures to newly opened pipelines.

      OPEC and its allies have agreed to reduce output by 1.2 million barrels per day (bpd) from January, in a move to be reviewed at a meeting in April. However, in the near term, the key global trend to watch out would be Chinese oil demand and accurate supply cuts from OPEC and non-OPEC that may drive crude prices higher4.

    Our forecast calls for a stabilization in the oil markets, followed by a rally in completions as we approach the spring.  The issue here is the pain that oilfield service companies will feel in the short-term.

Will there be layoffs?

Is ofs consolidation looming?

Will we see more electric fleets be ordered that seem to have long term financial benefits?

Will we see operators continue to switch pressure pumpers in an effort to cut costs?

Are the oil markets really going to hold and/or rally?

These are the stories we’ll be following.

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              Learn more about Primary Vision here: pvmic.com or fracspreadcount.com
_____________________________
1https://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart
2https://www.eia.gov/petroleum/drilling/pdf/permian.pdf
3https://www.desmogblog.com/2018/10/30/peak-shale-us-fracking-industry-permian-decline
4https://www.reuters.com/article/us-usa-rigs-baker-hughes/u-s-drillers-add-oil-rigs-permian-count-near-four-year-high-baker-hughes-idUSKCN1MM2AF

Southwestern Energy Future and Activity Levels

    In a recent activity, the natural gas producer Southwestern Energy (SWN) forged a deal with Flywheel Energy, LLC (founded last year with the backing of Kayne Private Energy Income Funds) to sell off its Fayetteville Shale E&P and related midstream gathering assets for $1.865 billion in cash. SWN’s assets in the region include approximately 915,000 net acres, 4033 production wells, 3.7 Tcf of reserves, anticipated 2019 production of 225 to 230 Bcf and midstream gathering infrastructure and compression. In addition to the deal, Flywheel Energy will assume approximately $438 million of future contractual liabilities of SWN. The aforementioned deal is expected to close in December 2018.

     SWN founded in Arkansas (aka Fayetteville) sold off its native state assets shouldn’t come as surprise to anyone. SWN’s own share has fallen from $39 in 2014 to $5 in 2018. As per a statement made by SWN’s President and CEO, Bill Way, the company will now focus more on its higher margin Southwest and Northeast Appalachia assets. They invested over $600 million in the next two years to further develop their liquid-rich Appalachia assets and will accelerate the path to self-funding.

Operational Performance of SWE

     According to our data, SWN, in 2017, had a weekly average frac job count (reflects the number of completions performed by the company) of 4 with the highest of 7 being achieved in 14th week. In 2018 (up to July), the company has a weekly average frac job count of 6 with the highest of 9 being achieved in the 17th week (see Figure 1). This clearly shows they companies stronger operational performance in the year 2018 as compared to the previous year.

Figure 1

     In terms of frac spread count (pressure pumpers or fleets used by the company), SWN had a weekly average of 4.5 in 2017, whereas in 2018 (up to July 2018) the company had a weekly average of 6 (see Figure 2).

Figure 2

We Know Who Gets the Job Done

        Does your company need to know who is servicing the operators in your region?  Oil companies rarely publish data on their service companies, so Primary Vision has developed techniques for estimating hydraulic fracturing equipment activity in the United States and Alberta, Canada using numerous target sources.  Drop us a line at info@pvmic.com if you want to learn more about our data.

We also released a new report on fracspreadcount.com that highlights prolific operators, pumpers by proppants, spreads and completions.  Order it today!

Bitcoin vs. Crude: The First Act

    Bitcoin had a remarkable run in 2017. Many traders and speculators even suggested Bitcoin to be a long-term asset class that may be used in portfolio construction with proper diversification.

    On the other hand, oil being one of the largest traded commodities has been one of the most valuable economic indicators. The largest traded commodities of oil are WTI and Brent whose price has always been quoted in dollars (USD). WTI, or Western Texas Intermediate, is extracted from U.S. oil fields. This variety of crude is considered very sweet and light (technically medium as its density is lower and sweeter because of the low percentage of sulfur). Brent crude has similar qualities (low sulfur and density) originates from the Black Sea and is typically the benchmark for pricing for multiple regions inside Europe, Africa and parts of the Middle East.

We looked to see if any correlations exist between Bitcoin and Crude.

    Crude has always had an interesting correlation with the US dollar.  When the dollar strengthens, oil prices fall and vice versa. This correlation has however begun to change after the shale revolution where US imports of oil have reduced drastically by almost 60% from 2008. [Business Insider] On the other hand, the volatility of  cryptocurrency prices is based on a multitude of factors ranging from governments banning crypto trading to certain individual and institutional investors. The sudden spike and correction in the past year has largely been due to market speculation by wealthy crypto traders.

    One of the main reasons for the strength in the US Dollar has been an increase crude prices. As has been seen in fig 1 and 2 below, both Brent and WTI prices have increased since July of last year while Bitcoin prices were relatively flat.

    Rising oil prices have been tied to a long history of issues related to supply and demand, geopolitical unrest etc. etc. Recently Iranian oil exports started declining resulting in a surge in oil prices as Iran produces around 2 % of the global oil supplies (equivalent to 3.8 million barrels per day as of April 2018). Besides Iran, the on-going tensions in Saudi Arabia and Iran, continuing conflicts in Iraq, Libya, Syria and Yemen have also impacted oil pricing. There are emerging disagreements with Saudi Arabia and USA over no action being taken in the story of Hosnain Mubarak, the former Egyptian president and ally of Saudi Arabia. This in turn could have an impact on pricing.  The point is that its hard to quantify all of these indicators at every turn.

WTI prices from Jan 2017 to September 2018 [MacroTrends]


Brent crude prices from Jan 2017 to September 2018 [MacroTrends]

Brent crude prices from Jan 2017 to September 2018 [MacroTrends]

    Though the Bitcoin may have no direct correlation to crude pricing, there are strong possibilities this may change. The emergence of the PetroBTC – trading commodities like Crude in Bitcoins may be more profitable for long term positions. This could replace trading oil in USD resulting in potential devaluation. Countries like Venezuela, which have huge oil reserves have introduced oil-backed crypto-currencies that might help their struggling community. This currency is in its infancy and has been controversial to say the least.

    Russia, Saudi Arabia and Iran are also rumoured to be moving towards petro-crypto-currencies. The question that remains is how the US dollar will unfold if the Gulf Cooperation Council (GCC) and major oil producing countries begin to trade oil with Bitcoins.  Following the USD and Bitcoin story may be without drama in its first act, but for how long?

We Know Who Gets the Job Done

        Does your company need to know who is servicing the operators in your region?  Oil companies rarely publish data on their service companies, so Primary Vision has developed techniques for estimating hydraulic fracturing equipment activity in the United States and Alberta, Canada using numerous target sources.  Drop us a line at info@pvmic.com if you want to learn more about our data.

We also released a new report on fracspreadcount.com that highlights prolific operators, pumpers by proppants, spreads and completions.

Rich Get Richer in the Permian

        The Permian Basin is white hot right now and supply is running thin.  As Bloomberg recently reported, the massive shale deposit in western Texas is quickly becoming one of the world’s top producing oil fields.  If the Permian were an OPEC country, it would be the fourth largest and by the end of the year it might leapfrog Iran and be the third-biggest (hypothetical) OPEC nation.

        The Permian has boomed in recent years and helped drive down the price of crude both in West Texas and around the world.  Its success comes from excellent geology combined with a prime location in a historically oil-friendly region.  Now improving technology and efficiencies will keep the basin competitive even if oil prices recede.  Plus, recently, one of the strongest players in Permian frac’ing just got bigger.

The Biggest Shale Producer in the Biggest Play

        Concho Resources traces its roots back to 1997, when one of the Permian’s oldest and best known production companies, Parker and Parsley, merged with T. Boone Pickens’ Mesa Petroleum.  One of Parker and Paisley’s executives, Tim Leach, split off and made a number of investments that would eventually become Concho Resources in 2006.  Since then, the company has continued to gobble up assets and rivals in the Permian.

        On March 28, Concho announced its latest acquisition, RSP Permian.  RSP is a smaller independent oil and gas company that has focused its efforts exclusively on prime unconventional acreage in the Permian.  As our frac job data shows, RSP is about a third the size of Concho when comparing number of completions.  RSP completed 48 frac jobs last year while Concho completed 144.

        Our proprietary “fractivity report” shows that Concho had 178 frac jobs in the first quarter of 2017, but only 111 in the last quarter.  RSP, on the other hand, had 30 frac jobs in the first quarter, 33 in the second quarter, 66 in the third, and 73 in the final quarter of 2017.  That steady growth no doubt made it a prime acquisition target.  The data in the above charts may have a small lag, but is over 90% complete at press-time.

        Concho brags that the merger with RSP will reinforce Concho’s position as the largest crude oil and natural gas producer from unconventional shale in the Permian Basin.  The combined company will have approximately ~27 rigs working on 640,000+ net acres of land.  Both companies have historically focused on core Permian assets, making their combined acreage very strong.  Concho says the acquisition will allow it to save money on operations while growing its production faster.

Halliburton a Hidden Beneficiary

        It turns out there is one major service company both Concho and RSP already have in common.  By our estimates, RSP has over 95% of its pumping done by Halliburton while Concho gets about 60% of its pumping from the same company.

        This means that now Concho will get the vast majority of its pumping from Halliburton, and as we previously discussed Halliburton has been aggressive in adding to its frac’ing fleet as both WTI and U.S. production continue to rise. The Concho/RSP combo benefits from the 128 spreads Halliburton has to offer, HALs local Permian Basin infrastructure and long-standing experience as the #1 pressure pumper in the United States.

We Know Who Gets the Job Done

        Does your company need to know who is servicing the operators in your region?  Oil companies rarely publish data on their service companies, so Primary Vision has developed techniques for estimating hydraulic fracturing equipment activity in the United States and Alberta, Canada using numerous target sources.  Drop us a line at info@pvmic.com if you want to learn more about our data.

Halliburton Puts More Spreads to Work

    Just a few weeks ago, we updated you that Halliburton was putting more equipment to work than was being reported in the media.  Now we are revising our estimates even higher after uncovering new data on the company’s activities.

Halliburton is Busy

    The company just reported a 34% revenue jump in the first quarter of 2018, a jump the company largely attributed to higher demand in North America.  Rising oil prices certainly helped as well.  CEO Jeff Miller said on an April 23 call that the company is also benefiting from a “tightness” in the hydraulic fracturing market.  In fact, fracking spreads across North America are virtually “sold out” at the moment.  Primary Vision agrees with this statement as we discussed supply with the Wall Street Journal just this past week.

    He said that high fracking equipment utilization rates are both limiting supply and degrading existing equipment.  He also pointed out that the ratio of rig counts to frac spreads has narrowed from 4:1 to 2:1, something we know that analysts are watching closely.  Are we getting more efficient or wearing down gear at an accelerated rate?

Halliburton Is Deploying Assets Into This “Tight” Market

    Mr. Miller has a good reason to be confident in his company’s ability to continue to thrive after posting a solid profit to begin 2018.  For one thing, he noted that the company’s new Q10 pumps are able to hold up to the rigors now facing the industry.  As we reported previously, Halliburton has been responding to the industry upswing by both putting newer Q10 frac pumps into the market and also reactivating older systems that were “cold stacked” following the 2014 price crash.

    We are revising our estimates today to reflect our new findings that Halliburton has activated 15 additional frac spreads in the first quarter of 2018.  That means we believe the company now has 128 marketed spreads instead of our previous estimate of 113.  Our overall marketed horsepower estimates are also increased to 4.6 million from 4.2 million.

    Our estimates are built on a proprietary system that analyzes numerous target sources, but Halliburton’s “fractivity report” over the past year shows that their activity has been growing steadily (ignore the dip in recent months, as the data has a natural lag of about 12 weeks that we compensate for in our estimates).

Get Our Data!

    Primary Vision is a leading supplier of data on hydraulic fracturing equipment activity in the United States.  Contact us to purchase access to more detailed information, and stay tuned for insights into the recent merger announcement by Concho Resources and RSP Permian.

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.

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:

The 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.

The End is the Beginning for Baker Hughes

by 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.

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.

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

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.

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.

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

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

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.

The 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.

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

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.

ReFrac Report Redux & Eagle Ford Drill Down

Updates, Refracs and Future

The rig count has gone up for the first time in 2015 and more permits were issued last week than in any week since February. Good news?  Kinda!

The grass is fairly green here as we move past the half way point of 2015 and boy is the refrac market heating up!

According to Forbes “1 in 2” frac’ed wells in the United States are candidates to be refrac’ed.

According to our frac records that is almost 50,000 candidate wells!

Halliburton and Schlumberger seem to be gearing up technically and financially to make a big splash into refracs in the second half of 2015.

Let that sink in a second…

Where are the candidate wells?
What operators are testing and what operators are ready to turn the refrac machine on?
How much proppant is being used in those refracs?
What is the chemical system that is being used?
What is the secondary frac chemistry?

All of these questions have been asked to Primary Vision in the last month! We can help you and your team learn more about the buzzy topic, so lets get started with our June report right now.

You can order here for just $99 (or jump on our soon to change yearly pricing of $899) that is packed with 30+ pages of information including…

Number of ReFrac’ed Wells by Quarter, Region, Orientation and Trajectory – Updated from May!
ReFrac’ed Wells by Year by Top 10 Operator (ALL and HZ wells separately) – Updated from May!
ReFrac’ed Wells by Year by Service Company (ALL and HZ wells separately) – Updated from May!
Average Proppant Mass by Proppant Type (ALL and HZ wells separately) – Updated from May!
ReFrac’ed Wells by Year by Proppant Type (ALL and HZ wells separately) – Updated from May!
Proppant Mass Comparison Between Original and Second Frac (ALL and HZ wells separately) – Updated from May!
Heat maps for Re’Frac wells for each year – Updated from May!
and we drilled down (all puns intended) into The Eagle Ford as well as made our prediction on total refracs for 2015.

Next month we’ll cover the Permian Basin and soon be releasing our second report based around pressure pumpers. Things are getting exciting!

Want to get on the early bird list for that? Email me at mjohnson@pvmic.com