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Survey Demographics
Hart Energy researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Eagle Ford Shale area. Participants included two oil and gas operators, five managers or sales personnel with well service companies, and one wireline completions specialist. Interviews were conducted during mid December 2014.
Part I. – Survey Findings
Among Survey Participants:
- Pressure Pumping Demand Stable in 1Q15, but Uncertain Afterwards [See Question 1a and 1b on Statistical Review]. Six of eight respondents reported that demand is expected to remain stable in the first quarter since schedules and budget were already set, but most expect demand and pricing to follow fluctuating oil prices. Two suppliers reported an immediate slowdown is already occurring with completions.
- Mid- Tier Service Provider: “Most of my major operators are keeping schedules steady through 1Q 2015, but all are already looking for price concessions and are warning that the oil price will set the pace beyond the first quarter.”
- HHP Supply Sufficient for the Region [See Question 2 on Statistical Review] Service providers reported that the hydraulic horsepower (HHP) pressure pumping equipment in the region is sufficient. Supply had tightened before the price drop, but oversupply could be a reality very quickly.
- Mid-Tier Service Provider: “We have five full time fleets with one client. He expects to cut back to four fleets by the end of the first quarter 2015. I will have a fleet of equipment looking for spot work or a new full time client at that time.”
- Slight Change in HHP Capacity from New Fleets Added [See Question 3 on Statistical Review]. Respondents reported a slightly higher estimate of HHP in the region over the past 90 days, as a few providers added new fleets. Average HHP now stands at ~2.8 million HHP, slightly higher than reported earlier. This extra capacity was needed before slowdown, but could become oversupply if low oil prices persist.
- Mid-Tier Service Provider: “Since many clients are warning of a slowdown, we could see oversupply develop quickly.
- Eagle Ford Well Metrics: Vertical Depth ~8,560-ft, Horizontal Laterals ~6,970-ft. [See Question 4 on Statistical Review]. Average vertical depth reported among respondents was 8,560-ft.; average horizontal lateral length was 6,970-ft. Average number of stages is 29 with most operators aiming for 200-ft. to 250--ft. spacing on stages. Injection rates average 77 bpm with approximately 6 stages completed daily on a 24-hour schedule. Huge sand volumes continue to be used in completions.
- Completions Consultant: “I continue to use large sand volumes because the production numbers justify it. We continue to look for every efficiency gain possible to raise production numbers per well.”
- Average Cost Per Stage in Eagle Ford ~$101,000 [See Question 5a on the Statistical Review]. The average per stage price is $101,000 and is expected to flatten over the quarter or possibly decline. The amount of proppant used will likely remain the same, but operators are already asking for price concessions in light of the lower oil price.
- Top Service Provider: “With the huge sand volumes, prices had been inching up, but now concessions in prices are likely.”
- Flat or Declining Prices Expected QTQ [See Question 5b on the Statistical Review]. All respondents expect prices to flatten or decline during the next three months. The low price of oil has everyone concerned and has come during a period of increased burden of pump wear due to high sand volumes.
- Mid-Tier Service Provider: "Prices have been going up due to direct costs of sand logistics and supply. The extra wear on fluid ends and pumps had us all hoping for slightly better margins. That is now impossible until the oil price recovers.”
Part II. – Statistical Review Well Stimulation/Pressure Pumping [Eagle Ford Shale]
Total Respondents = 8 [Operators = 2, Frac Service Providers = 5, Wireline Operators = 1]
1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in 1Q15 compared to 4Q14?
Expect to remain 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: 2,800,000 HHP
*Slight growth quarter-to-quarter. No companies entering/exiting the area last 90 days (some fleets added by existing providers)
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 frac stages per day? Is this a 12-hour or 24-hour shift?
Average Vertical Depth: 8,560-ft.
Average Horizontal Lateral Length: 6,970-ft.
Average No. of Frack Stages: 29
Injection rates (barrels/min): 77
Average No. of Frack Stages/Day: 6
12-hr or 24-hr: 24-hr
5a. What is the average cost per stage in your area now?
$90,000- $120,000: 1
$100,000- $100,000: 1
$100,000: 5
$100,000-$140,000: 1
Average cost per stage: $101,000*
*Cost per stage is reporting higher due to sand and proppants volumes, plus an increase in PP charges
5b. Do you expect fracking prices to increase, remain the same, or decrease over the next 3 months?
Remain the same (0%): 7*
Decrease: 1
*Most expect that demand will closely track with oil prices during 1Q 2015
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