Synopsis

The pace of completions has slowed over the last 90 days in the Eagle Ford Shale as more drilling rigs stack out.

Oil and gas operators with acreage in both the Eagle Ford and Permian Basin are switching activity to the Permian until pricing recovers.

The shift is reflected partially by the steep collapse in Eagle Ford well stimulation capacity, which has fallen to 450,000 hydraulic horsepower (hhp). This number is down from the more than 1 million hhp reported as recently as late 2015.

Well stimulation providers estimate there are 22 crews active in the Eagle Ford. Meanwhile, the hhp numbers confirm that well stimulation companies are leaving the Eagle Ford with some relocating equipment to the Permian where they now service the Eagle Ford out of Permian yards.

Operators say they need $53 oil sustained before activity improves, which is in line with most other basins. Though gas drilling is less prominent in the Eagle Ford, operators indicate they need an average price of $2.75 to stimulate activity in gas-rich portions of the play.

Although the pace of completions has slowed, pricing per stage has been flat over the last 90 days at $36,000. Discounts are available to operators who want to fracture stimulate multiple wells, but there are few takers in the current environment.

Watch for the next Heard In The Field report on the Eagle Ford pressure pumping market in June 2016.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Shrinks Quarter-To-Quarter
    [See Question 1a and 1b on Statistical Review]
    ​Six of eight respondents reported that first-quarter 2016 demand has shrunk compared to fourth quarter of 2015 because more rigs have been released and completion of wells has slowed. The other two respondents said demand has remained same.
    • Mid-Tier Service Provider: “We continue to see more rigs released and [fracking] fleets parked at these [low oil] prices.”
  • Oil & Gas Prices Must Improve before Well Completions Increase
    [See Question 2 on Statistical Review]
    ​Oil prices averaging $53 and natural gas prices averaging $2.75 would be required for operators to increase exploration and development activity in the Eagle Ford, according to respondents.
    • Mid-Tier Service Provider: “These wells are not economic at the current prices. So the focus is shifting to the Permian until prices rally.”
  • Less Than 25 Fleets Estimated To Be Left In Area
    [See Question 3 and 4 on Statistical Review]
    Respondents estimated that total hydraulic horsepower left in the area is approximately 450,000 hhp spread among an average 22 fleets. This is a significant decline from the about 1 million hhp estimated in the December report. Several respondents mentioned that companies have moved fleets to Permian, but cover Eagle Ford wells as needed with the same fleets. Several companies have left region entirely.
  • Eagle Ford Well Metrics: Vertical Depth Averages ~9,900 Feet, Laterals Average ~6,700 Feet
    [See Question 5 on Statistical Review]
    ​Average vertical depth reported is 9,938 feet across the play. Average lateral length is 6,681 feet. Average number of stages is 27. Injection rates average 67 barrels per minute with about six stages completed daily on a 24-hour schedule.
    • Mid-Tier Operator: “We are averaging doing 20 to 30 stage slickwater fracks on 6,000 feet to 8,000 feet laterals.”
  • Average Cost Per Stage: ~$36,250
    [See Question 6 and 7 on the Statistical Review]
    ​The average per stage price is reported to be $36,250, somewhat similar to findings in December. One service provider said lower pricing is available for multi-well packages requiring fracking three to four wells. However, this trend is not common currently. All respondents expect prices to remain the same over the next three months.
    • Mid-Tier Service Provider: “Prices have hit bottom and can only go up from here.”

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 Shale area. Participants included seven managers or sales personnel with well service companies, and one consultant working for E&P companies. Interviews were conducted during late February and early March 2016.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Eagle Ford Shale]

Total Respondents = 8

[Fracking service providers = 7, E&P consultant = 1]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink first-quarter 2016 compared to the fourth quarter of 2015?

Shrink:

6

Remain the same:

2


2. What oil price (per barrel) and what natural gas price (per thousand cubic foot) is needed for demand for fracking services to improve?

Oil Price

# of Responses

Gas Price

# of Responses

$45-$50

4

$2-$2.50

4

$50-$60

4

$3-$3.50

4

Average $53

8

Average $2.75

8


3. In your estimation, what is the total hydraulic horsepower (hhp) in your area? (all providers combined)

300,000-400,000 hhp:

1

401,000-500,000 hhp:

6

501,000-600,000 hhp:

1

Average:

~450,000 HHP


4. How many total crews (spreads) do you estimate are active in the area?

15-20:

1

21-25:

7

Average estimated:

22 crews


5. 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?

Average vertical depth:

9,938 feet

Average horizontal lateral length:

6,781 feet

Average number of frack stages:

27

Injection rates (barrels per minute):

67

Average number of frack stages per day:

6

12-hour or 24-hour:

24-hour


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

$25,000-$30,000:

7

$31,000-$40,000:

1

Average:

$36,250 per stage


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

Remain the same (0%):

8


End Statistical Survey

Comments