Survey Demographics

Concerns about another downturn in demand for pressure pumping services is spreading across the Bakken following the most recent drop in commodity prices. Though activity was listed as stable by a majority of respondents, several noted that operators indicate they will begin postponing well completions on drilled wells because of lower commodity prices. Turmoil in the market has created confusion about regional pressure pumping capacity. Service providers on average estimated pressure pumping capacity in the Bakken Shale at just under 1 million in hydraulic horsepower (HHP), though most cited capacity in a range from 750,000 to 1 million HHP. Price per stage fell to $37,000, a significant drop from last quarter. However, much of the drop during third-quarter 2015 is related to reduced prices for bulk commodity proppant, chemicals and adjunct services such as trucking for materials. As in other markets, improvements in well productivity are sustaining production levels in the Bakken while an estimated backlog of 2,000 drilled but uncompleted wells are likely to sustain production in the future. However, service providers expect pressure pumping pricing to rise quickly when operators begin converting the backlog in uncompleted wells into production. Watch for the next Bakken pressure pumping update in November 2015.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Remains Flat To Down In The Region
    [See Question 1a and 1b on Statistical Review]
    ​The majority of respondents reported that demand has remained flat quarter-to-quarter in the region. However, some survey participants said demand in third-quarter 2015 has decreased compared with second-quarter demand. Demand is questionable due to weak oil pricing and some respondents voiced concern that fracks will be delayed again in light of the recent oil price erosion.
    • Mid-Tier Service Provider: “Demand could take another hit as more frack delays are being considered in light of recent drop in oil prices to $45.”
    • Completions Consultant: “Low oil prices are killing demand.”
  • HHP Supply Excessive For The Region
    [See Question 2 on Statistical Review]
    ​Six of eight respondents agreed there is excessive supply even as many fleets have been idled, but two said supply was sufficient. No providers are reported as entering or exiting the region this quarter.
    • Small-Tier Service Provider: “We have kept three to four fleets fairly busy, but we are down to 60% utilization on those fleets now and may try to move one fleet elsewhere to keep it busy.”
  • ~1 Million HHP Capacity Estimated In The Bakken
    [See Question 3 on Statistical Review]
    ​While all respondents estimate regional pressure pumping capacity in a range from 750,000 HHP to 1,000,000 HHP, the average of responses dropped below 1 million HHP due to the large number of idled fleets.
    • Mid-Tier Service Provider: “We only get one in 10 bids now as the delayed fracks increase the pressure to maintain market share. We refuse to pay to work our fleets.”
  • Bakken Well Metrics: Vertical Depth ~10,072 Feet, Horizontal Laterals ~10,438 Feet
    [See Question 4 on Statistical Review]
    Average vertical depth reported is about 10,072 feet in the Bakken and horizontal laterals average 10,438 feet. Average number of stages is 39. Injection rates average 55 barrels per minute with about six stages completed daily on a 24-hour schedule. Sliding sleeve coil fracks average 23 barrels per minute and 11 stages daily.
  • Average Cost Per Stage In Bakken ~$37,000
    [See Question 5a on the Statistical Review]
    The average per stage price is estimated at $37,000, a significant drop from May when the average cost per stage was in the mid $50,000s. Respondents explained that fracking equipment is being bid at break-even or below cash cost during the current low oil price environment. In addition, respondents reported that material costs for sand and ceramics dropped significantly over the past three months. Also, trucking costs have fallen as well since earlier reports.
    • Mid-Tier Service Provider: “Prices are at or below margin now. Some big providers are deliberately selling at a loss to make it hard for all of us to stay in.”
    • Mid-Tier Service Provider: “We see even more delayed fracks planned in light of the recent oil price downturn. Several providers are now bidding at a loss to keep market share.”
  • Flat Prices Expected Quarter-To-Quarter
    [See Question 5b on the Statistical Review]
    ​All respondents expect prices to remain flat during the next three months. Several expect the growing backlog of delayed fracks will make prices spike quickly if there is any recovery in oil prices.
    • Mid-Tier Service Provider: "We know every provider is hurting at these prices. The backlog of 2,000 wells delayed for completion will become an issue soon.”
  • Pricing Concessions, Completion Efficiencies Help Operators Keep Producing
    [See Question 6a on the Statistical Review]
    Bakken operators reported that production efficiencies are helping the industry to keep producing during the extended oil price slump. While the number of rigs drilling has dropped dramatically, production numbers are surprisingly stable due to improved efficiencies.
  • Delayed Completions Now Increasing In Bakken
    [See Question 6b on the Statistical Review]
    ​Many respondents reported more delayed fracks are expected. Bakken wells are generally known to produce 70% of product during the first 12 months and many operators want to delay that high quantity of production until the oil price is higher.
    • Mid Tier Service Provider: "The oil price collapse is just delaying more and more fracks.”

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 area. Participants included five managers or sales personnel with well service companies, one completion consultant and two operators. Interviews were conducted during the first week of August 2015.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Bakken Shale]

Total Respondents = 8

[5 Fracking Service Personnel, 1 Consultant, 2 Operators]

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

Expect to shrink:

3

Remain the same:

5


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

Sufficient:

2

Excessive:

6


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

Average total HHP among respondents:

~1 million HHP active


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 per min) in this play? What is the average frack stages per day? Is this a 12-hour or 24-hour shift?

Average vertical depth:

10,072 feet

Average horizontal lateral length:

10,438 feet*

Average number of frack stages:

39*

Injection rates (barrels per min):

55 bpm PP/23 bpm SS**

Average number of frack stages per day:

6

12-hour or 24-hour:

24-hour

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

**PP = plug and perf, SS = sliding sleeve


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

$25,000-35,000:

2

$30,000-40,000:

4

$40,000-50,000:

2

Average cost per stage:

~$37,000 per stage


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

Remain the same (0%):

8


6a. What strategies are companies putting into place to cope with a low price environment?

Slowed drilling and negotiated concessions:

3

Delayed fracks:

5


6b. What are you seeing in terms of the number of wells drilled but not completed in your area?

1,500-2,000 well completions delayed:

3

Completion delays (no estimate given):

5


End Statistical Survey