Synopsis

Well stimulation contractors are now at cash cost and stacking out equipment or letting crews go. Pricing per stage is down more than 30% to $58,000 versus the 4th quarter 2014 and contractors are competing for market share. Pressure pumping contractors believe activity levels have bottomed in the Bakken. Respondents cite 1.5 million in combined hydraulic horsepower for regional capacity, down from 1.9 million HHP in November 2014, but note that many fleets have been idled. Watch for the next update on Bakken pressure pumping in May 2015.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Expected to be Slow but Stable QTQ
    [See Question 1 on Statistical Review]
    All respondents reported that demand through 2Q15 for pressure pumping equipment will be slow, but stable in the Bakken Shale until the oil price recovers to $65 or more. Respondents explained that most adjustments have been made and should stabilize at current levels until a rebound occurs.
    • Top-Tier Operator: “We need the price back around $65-$70 to increase again. Until then, it is slow but steady.”
  • HHP Oversupplied at Present
    [See Question 2 on Statistical Review]
    Service providers reported that the pressure pumping hydraulic horsepower (HHP) in the region is oversupplied. Several fleets are parked as many have slowed drilling and delayed completions.
    • Mid-Tier Service Provider: “There is about half of the former demand at present, idling many fleets. There is an oversupply until the (oil) price recovers. After that completing the backlog of wells will need all available horsepower.”
  • HHP Capacity Estimated at ~1.5 Million HHP
    [See Question 3 on Statistical Review]
    Respondents estimated there is less hydraulic horsepower (HHP) over the past 90 days, but it is not clear if any of the idled fleets have actually relocated. Respondents estimated current HHP capacity at ~1.5 million.
    • Mid-Tier Service Provider: “Demand had been stable during last half of 2014. We are now experiencing an oversupply due to the slowdown.”
  • Well Metrics: Vertical Depth <10,000-ft, Horizontal Laterals ~10,250-ft.
    [See Question 4 on Statistical Review]
    Average vertical depth reported is 9,719-ft. with an average of 10,250-ft. of horizontal lateral. Average number of stages is 47 with stage spacing ranging between 150-ft. to 250-ft. Injection rates average 64 bpm with approximately six stages completed daily on a 24-hour schedule. Winter weather tends to slow the rate of completions.
  • Average Cost Per Stage in Bakken ~$58,000
    [See Question 5a on the Statistical Review]
    The average per stage price is $58,000 and is expected to remain the same during the next three months. There is a consensus among respondents that prices have hit the bottom.
    • Mid-Tier Service Provider: “We now frack at the lowest price without going in the hole. Most are trying to keep the operators completing wells until price comes back.”
  • Steady Prices Expected QTQ
    [See Question 5b on the Statistical Review]
    All respondents expect cost-per-stage prices to remain the same during the next three months. Respondents mentioned that prices are at the bottom and many are working to keep market share at this point.
    • Mid-Tier Service Provider: "We are working without a profit margin now. We all want to keep market share and our best crews working. We know that eventually prices will return at least to $65 or $70 where we can all work profitably.”

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 Bakken Shale area. Participants included two oil and gas operators, and six managers or sales personnel with well service companies. Interviews were conducted during late February 2015.


Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Bakken Shale]
Total Respondents = 8

[Oil and Gas Operators = 2, Service Providers = 6]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in 1Q15 compared to 4Q14?

Stay the same: 8

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

Sufficient: 8

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

Avg. total HHP among respondents 1,500,000 HHP*

*slight idecrease since 4Q14

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?

Bakken Shale

Average Vertical Depth: 9,719-ft.
Average Horizontal Lateral Length: 10,250-ft.

Average Frack Stages: 47 (PP)/70 (coil)

Injection rates (barrels/min): 64 bpm (PP)/

25 bpm (coil)

Average No. of Frack Stages/Day: 6 (PP)/ 11 (coil)

12-hr or 24-hr 24-hr

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

$61,000-$70,000 3

$50,000-$60,000 4

$30,000-$40,000 1*

Average cost per stage: $58,000 per stage

*this price not included in avg as it is for coil/sleeve fracks only

5b. Do you expect fracking prices to increase, remain the same, or decrease over the next 3 months? By what percent (%)?

Remain the same (0%): 8*

*Respondents agreed that prices are at the bottom.

6a. What has been the near-term effect of the drop in the price of oil on activity in your area?

Slowed considerably already: 3

Slowdown has dropped service prices 15-20%: 5

6b. Looking to 2015, what are your expectations of work volumes?

Slowdown until price rebound: 5

Slow but stable: 2

Cutting fleets in half and delaying some fracks: 1