Capacity Drops Further In Region

Synopsis

Well stimulation service providers continue to reduce fleet size in the Eagle Ford as pressure pumping activity remains at very low levels.

Operators have reduced capital spending to manage their way through the current environment and hold on in anticipation of a recovery in commodity prices in 2016.

Regional pressure pumping capacity has fallen to an estimated 1 million in hydraulic horsepower (HHP) vs. 1.1 million HHP in the August survey. Service providers estimate between 30 and 40 crews are active in the Eagle Ford, though all crews are underutilized.

Typical Eagle Ford wells feature laterals averaging 6,600 feet and 28 stages. The average price per stage has fallen to $30,000, which is consistent with other regional pressure pumping markets but down from the $40,000 in August.

Watch for the next Eagle Ford well stimulation report in March 2016.

Part I. – Survey Findings

Among Survey Participants:

• Demand Flat Quarter-To-Quarter In The Region
  [See Question 1a and 1b on Statistical Review]
  ​Six of eight respondents reported that demand in the fourth quarter remains flat because of the low oil price. However, two respondents expect demand to shrink further. Looking forward, most respondents expect demand to remain flat until the price of oil recovers, which they hope will happen in 2016.
  • Mid-Tier Service Provider: “Demand is slow and constant. Price will help increase demand next year.”

• HHP Supply Sufficient
  [See Question 2 on Statistical Review]
  ​Five of eight respondents reporting a sufficient supply of HHP capacity, but three continue to report excessive supply even as several frack providers reduced fleets in the region.
  • Mid-Tier Service Provider: “Budgets will remain restricted into 2016 until there is some price improvement.”

• Fracking Capacity Reported Averages 1 Million HHP
  [See Question 3a, 3b, and 3c on Statistical Review]
  ​Among respondents, HHP capacity in the region is estimated to be about 1 million HHP in the play, down slightly from the 1.1 million reported in August. Most respondents estimated 30 to 40 fleets continue to service the area, but most are underutilized.
  • Mid-Tier Service Provider: “We are down to one fleet here now…and share it with any need in Texas.”

• Eagle Ford Well Metrics: Vertical Depth Averages More Than 10,000 Feet
  [See Question 4 on Statistical Review]
  ​Average vertical depth reported is about 10,400 feet across the play. One operator is now focused on wells being drilling in the Bryan/College Station region at about 9000 feet. Average lateral length is 6,600 feet and average number of stages is 28. Injection rates average 70 barrels per minute with about six stages completed daily on a 24-hour schedule.
  • Mid Tier Operator: “We are usually doing 25-30 stage fracks in the Eagle Ford on 7,000-foot laterals.”

• Average Cost Per Stage: ~$30,000
  [See Question 5a and 5b on the Statistical Review]
  ​The average per stage price is reported at $30,000, down somewhat from about $40,000 reported in August. All respondents expect prices to remain the same over the next three months.
  • Mid-Tier Service Provider: “Prices are at bottom now. Some are working at a loss, but we try to hold at break even to hold on until recovery.”

• Delayed Completions Continue In Eagle Ford Despite Well Backlog
  [See Question 6b on the Statistical Review]
  The number of drilled but uncompleted wells continues to grow as many operators are delaying completing wells until oil price recovers. Backlog is building as the trend to slow the pace of completing wells continues.
  • Mid-Tier Operator: “We will continue at this reduced pace until the price recovers substantially and improves the economics.”

End Survey Findings

Survey Demographics

H A R T E N E R G Y researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Eagle Ford Region. Participants included seven managers or sales personnel with well service companies, and one technical consultant working for an E&P company. Interviews were conducted during the late November and early December 2015.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Eagle Ford Shale]

Total Respondents = 8

[Fracking service providers = 7, Operators = 1]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in fourth-quarter 2015 compared to the third quarter?

2. Would you characterize the supply of pressure pumping equipment in your area as excessive, sufficient or insufficient to meet late 2015 demand?

3a. How would you estimate total HHP capacity for the region?

3b. How many total crews (spreads) do you think are active in the area?

3c. Have any service providers left the play in the last 90 days?

4. What is the average vertical drilling depth, average horizontal lateral length, number of frack stages and injection rates (barrels per minute) in this play? What are the average frack stages per day? Is this a 12-hour or 24-hour shift?

5a. What is the average cost per stage in your area now?

5b. Do you expect fracking prices to increase, remain the same, or decrease over the next three months?

6a. What strategies are companies putting into place to cope with a low price environment?

6b. What are you seeing in terms of the number of wells drilled but not completed in your area?

End Statistical Survey