Synopsis

The rate of drilled but uncompleted wells is slowing, prompting a modest increase in demand for well stimulation services in the Denver-Julesburg (D-J)/Niobrara and other western basins. Oil prices near $60 have also brought some operators back to the market. Operators have embraced massive proppant loaded slickwater fracks as a cost saving measure. Meanwhile, service provider competition has kept price per stage low, though a slight majority of contractors expect pricing will improve, along with demand, over the third quarter of 2015. Watch for the next report on greater Rocky Mountain well stimulation in December 2015.

Part I. – Survey Findings

Among Survey Participants:

  • Third-Quarter 2015 Demand Expected To Grow Slightly Quarter-To-Quarter
    [See Question 1a and 1b on Statistical Review]
    ​Five respondents reported that demand is up slightly as the rate of delayed fracks is slowing. In addition, demand for completions increased slightly when oil prices hovered in the $60 range.
    • Mid-Tier Service Provider: “We are now hearing lots of talk about slowing the number of delayed fracks due to the backlog and inevitable price rise as operators begin to address the frack backlog.”
  • Hydraulic Horsepower (HHP) Supply Sufficient For The Region
    [See Question 2 on Statistical Review]
    ​All seven respondents reported that supply is sufficient at current demand because departing fleets have reduced capacity to fit current demand.
    • Top-Tier Service Provider: “Pressure pumping supply has stabilized with so many smaller companies shutting down operations and with many fleets idled among remaining service companies.”
  • Uncertainty About Total HHP Capacity Continues
    [See Question 3 on Statistical Review]
    ​Respondents report HHP in the region has dropped, but are reluctant to estimate the total HHP in the area because so many fleets are idle or have left the area. Average hydraulic horsepower is reported at about 800,000 HHP.
    • Mid-Tier Service Provider: “We now consider this region among our best for market share. We are seeing growing clientele as other providers have left the area.”
  • Niobrara Well Metrics: Vertical Depth Range 7,500- 10,000-ft., Horizontal Laterals About 5,285-ft.
    [See Question 4 on Statistical Review]
    ​Respondents in the D-J Basin/Niobrara reported that average vertical depth is in a range of 7,500 feet to 10,000 feet with horizontal laterals averaging 5,285 feet. All respondents reported plug and perf fracks as the main completion technique for this report, but acknowledged some clients are using sliding sleeves, too.
    • Completions Supplier: “There are operators using both plug and perf and sliding sleeves with ball drop activation.”
  • Average Cost Per Stage: About $38,000 for Plug and Perf
    [See Question 5a on the Statistical Review]
    ​The average per stage price is $37,642 for plug and perf fracks with large sand volumes. This price is indicative of more use of less expensive slickwater while some are using a hybrid system with crosslink gel at the end of some stages.
    • Mid-Tier Service Provider: “Operators have demanded and received deep concessions for the wells they are currently completing. They were delaying a large number of completions on drilled wells, but that practice seems to be slowing.”
  • Increase In Prices Expected Quarter-To-Quarter
    [See Question 5b on the Statistical Review]
    ​Four of seven respondents expect prices to increase during the next three months. Two respondents expect prices to stabilize with one expecting price to continue to adjust downward as providers fight to gain market share as competitors leave the region.
    • Mid-Tier Operator: "The prices are bottomed out from the frack company’s perspective, and prices should creep up along with demand.”
  • Companies Respond To Low Price Environment
    [See Question 6a and 6b on the Statistical Review]
    Operators have been demanding and receiving deep price concessions on all completion costs in order to keep working, but as delays are slowed to address the backlog, pricing may increase slightly as demand increases.

End Survey Findings

Survey Demographics

H A R T E N E R G Y researchers completed interviews with seven industry participants in the well stimulation/pressure pumping service segment in the Rocky Mountains area outside of the Bakken. Participants included two oil and gas operators, one frack supply company and four managers or sales persons with well service companies. Interviews were conducted during the first week of July 2015.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Other Rocky Mountain Areas outside of Bakken]

Total Respondents = 7

[Operators = 2, Frack Equipment Suppliers = 1, Frack Service Providers = 4]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in third-quarter 2015 compared to second quarter?
Stay the same: 2
Expect to grow: 5

2. Would you characterize the supply of pressure pumping equipment in your area as excessive, sufficient or insufficient to meet early 2015 demand?
Sufficient: 7

3. How would you estimate total HHP capacity for the region?
Avg. total HHP among respondents: About 800,000 HHP*
*This number is a rough estimate as changes and departing fleets have been hard to quantify.

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?

Niobrara

Vertical depth range:

7,500-10,000-ft.*

Average horizontal lateral length:

5,285-ft.

Average number of frack stages for P&P**:

29

Injection rates (b/m):

66 b/m

Average number of frack stages/day:

7

12-hour or 24-hour:

24-hour

*Respondents gave ranges across the region

**Plug and perf

5a. What is the average cost per stage in your area now?
Average of plug and perf stages: $37,642

5b. Do you expect fracking service prices to increase, remain the same, or decrease over the next three months?
Decrease (no percent estimated): 1
Remain the same: 2
Increase: 4

6a. What strategies are companies putting into place to cope with a low price environment?
Operators asking and getting price concessions: 4
Delayed completions: 2
More slickwater/less crosslink: 1

6b. What are you seeing in terms of the number of wells drilled, but not completed in your area?
Operators delaying some completions (no specific number estimated): 7

End Statistical Survey