Survey Demographics

Hart Energy researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Marcellus/Utica area. Participants included eight managers or sales personnel with well service companies. Interviews were conducted during mid-November 2014.

Part I. – Survey Findings

Among Survey Participants:

  • Drop in Oil Price Dampens Demand in the Region [See Question 1a and 1b on Statistical Review]. Most respondents reported demand has flattened in the region. In a change from earlier reports in which demand was steady to up, operators are cautiously continuing with current schedules while watching for prices to recover before planning any expansion.
    • Anecdotal Information/Quotable: Mid-Tier Service Provider: “We are not seeing any shrinkage in demand, but we are seeing demand flatten. We don’t expect to hear of new projects or expansion plans until the oil price recovers.”
  • HHP Supply Sufficient for the Region [See Question 2 on Statistical Review]. All respondents agreed that there is adequate equipment to meet current needs in the area.
    • Anecdotal Information/Quotable: Mid-Tier Service Provider: “We have four fleets in the region and we run two fleets on a 24-hour schedule and two fleets on a 12-hour schedule. If demand increases, we could put all fleets on 24-hour schedule, but that will likely be after oil and gas prices stabilize.”
  • 1.56 Million HHP Capacity Estimated in the Region [See Question 3 on Statistical Review]. Respondents estimated there is an average 1.56 million HHP in the region. Meanwhile, service providers expressed a “wait and see” sentiment before they make any changes in their fleets. If winter gas prices cause an increase in local demand, there could certainly be a tightening of pressure pumping equipment supply, but slowing demand in oil plays could free up hydraulic horsepower for relocation. Most respondents think it is too early to tell what will happen in 2015.
    • Anecdotal Information/Quotable: Mid-Tier Service Provider: “We now have seven fleets in the area and we are seeking to get another one soon. However, we will wait until we get increased demand to bring another fleet in.”
  • Marcellus Well Metrics: Vertical Depth ~7,000-ft., Horizontal Laterals ~7214-ft. [See Question 4 on Statistical Review]. Average vertical depth reported is ~7,000-ft. in the Marcellus and an average of 7,214-ft. of horizontal lateral. Average number of stages is 31. Injection rates average 69 bpm with approximately 6 stages completed daily on a 24-hour schedule.
    • Anecdotal Information/Quotable: Mid-Sized Service Provider: “We are guarded in our optimism that prices for oil and gas will stabilize and our situation in Marcellus will be great for 2015.”
  • Average Cost Per Stage in Marcellus ~$91,000 [See Question 5a on the Statistical Review]. The average cost per stage is $91,000 among respondents and is expected to remain the same over the next three months. Logistics and cost of sand are both mentioned as part of the rising costs that could be passed through. However, respondents expect prices to remain flat until commodity prices stabilize.
    • Anecdotal Information/Quotable: Mid-Tier Service Provider: “Things should remain stable early in 2015 until we see if prices stabilize. One interesting thing to watch is Utica formation drilling in western PA. Some have drilled past Marcellus to deeper Utica there, finding abundant supplies of gas with more oil and natural gas liquids. If prices stabilize this may pick up. These completions would be more expensive, but with bigger ROI if prices recover.”
  • Flat Prices Expected QTQ [See Question 5b on the Statistical Review]: Seven of eight respondents expect well stimulation/pressure pumping prices to flatten during the next three months. However, issues surrounding rail and trucking movements could cause some material cost increases, which can be passed through to customers.
    • Anecdotal Information/Quotable: Regional Operator: "We are struggling with rail issues right now as the harvest demand for engines runs rail companies short. At the same time truckers have raised prices twice. While service providers won’t be raising their internal pricing, some logistics costs may pass through to operators.”

Part II. – Statistical Review, Well Stimulation/Pressure Pumping

Total Respondents = 8 [ Fracking Service Providers = 8]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in 4Q14 compared to 3Q14?

Expect to grow: 1

Remain the same: 5

Expect to shrink: 2

2. Would you characterize the supply of pressure pumping equipment in your area as excessive, sufficient or insufficient to meet early 2014 demand?

Sufficient: 8

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

Avg. total HHP among respondents 1,560,000 HHP

3b. Have any new providers entered the play in the last 90 days?

No new providers: 8

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

No: 8

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

Marcellus

Average Vertical Depth: 7,000-ft

Average Horizontal Lateral Length: 7,214-ft.*

Average No. of Frack Stages 31*

Injection rates (barrels/min) 69 bpm

Average No. of Frac Stages/Day 6

12-hr or 24-hr 24-hr

*These lengths and stages reflect regional differences not spacing changes.

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

$65-99k 5

$100k 2

$100k-$110k: 1

Average cost per stage: ~$91,000 per stage

5b. Do you expect fracking prices to increase, remain the same, or decrease over the next 3 months?

Increase (based on logistics costs): 1

Remain the same: 7

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