Synopsis

Eagle Ford operators are expected to target drilled but uncompleted wells (DUCs) first if oil prices settle at $50. However, it will take $55 oil to stimulate an increase in demand for oil services, according to Hart Energy’s Heard in the Field survey.

Little drilling is underway currently in the Eagle Ford Shale. Service providers expect operators will increase production first from DUCs and workover services to take advantage of any increase in commodity price before adding new wells to the mix.

The volume of DUCs increased about 5% over the last 90 days, according to 60% of survey participants. Although, the remainder said the volume of DUCs was unchanged.

Well stimulation firms are completing DUCs in five days on average and can reduce that cycle by 15% to 20% if laterals are completed in batches.

Meanwhile, regional well stimulation capacity dropped further over the last 90 days to 281,000 in hydraulic horsepower (hhp) from 450,000 hhp in February, according to survey respondents. The number of regional well stimulation fleets fell to 13 in May vs. 22 in February.

Well stimulation firms have been consolidating capacity in other areas of Texas, primarily in the Permian Basin, and servicing adjacent markets out of the consolidated yards.

Operators have dialed in completion methodology to slickwater, plug and perf and 100 mesh sand on laterals averaging 7,250 feet with 26 stages. Consequently, pricing for well stimulation dropped in May to $32,000 per stage on average from $36,250 in February.

Well stimulation service providers say pricing flattened out in May with the only variation based primarily upon the volume of proppant used in completion.

Watch for the next Heard In The Field report on the Eagle Ford well stimulation/pressure pumping market in August.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Generally Flat Quarter-To-Quarter
    [See Question 1 on Statistical Review]
    ​Five of eight respondents said demand for pressure pumping services remained flat in second-quarter 2016 compared to the first quarter. Another two said demand eroded further, but one respondent said demand has begun to increase.
    • Mid-Tier Service Provider: “There is no increase in drilling expected but demand for pressure pumping will increase if prices continue above $50.”

 

  • DUCs Flat To Up Slightly Quarter-To-Quarter
    The number of DUCs is flat to up slightly quarter-to-quarter with three respondents reporting no change in completion backlogs and five reporting DUCs have increased by about 5%.
    Top-Tier Service Provider: "Few are drilling and those that do often delay the completion.”

 

  • Oil Price North Of $55 Needed For Fracking Demand To Increase
    [See Question 2 on Statistical Review]
    ​Among respondents, an average oil price of $57 and average natural gas price of $2.88 would be required for fracking demand to increase. Several respondents mentioned that demand for pressure pumping will definitely ramp sooner than drilling due to the current DUC backlog.
    • Mid-Tier Service Provider: “There are several Eagle Ford operators who have choked back production while they wait for a price recovery. Those operators can increase production quickly without more drilling. They want to increase production slowly as prices rise to prevent oversupply reactions again.”

 

  • DUC Completions Average ~5 Days
    [See Question 4a and 4b on Statistical Review]
    ​Among respondents, the time to complete a DUC well averages five days. Utilizing a multiwell zipper frack approach to those completions can possibly reduce that time per well by 10% to 20% per well on the pad.
    • Mid-Tier Service Provider: “We are completing these DUC wells in the average five days here in Eagle Ford. With zipper fracks, we can save 15% to 20% of time to frack each well.”

 

  • Regional Hydraulic Horsepower Estimated At ~281,000 hhp
    [See Question 5 and 6 on Statistical Review]
    Average estimated hydraulic horsepower in the region has dropped to about 281,000 hhp, down considerably from the 450,000 hhp estimated in February. About 13 fleets are still available to frack Eagle Ford wells, down from 22 estimated in February. Some of these fleets are available to go anywhere in Texas as needed.

 

  • Eagle Ford Well Metrics: Vertical Depth Averages 9,719 Feet
    [See Question 7 on Statistical Review]
    Average vertical depth reported among respondents is 9,719 feet across the Eagle Ford. Average lateral length is 7,250 feet. Average number of stages is 26. Injection rates average 68 barrels per minute with about six stages completed daily on a 24-hour schedule.

 

  • Average Cost Per Stage In Region: ~$32,000
    [See Question 8 and 9 on the Statistical Review]
    ​The average per stage price is reported at $32,000, down from $36,250 reported in February. All respondents expect prices to remain the same over the next three months.
    • Mid-Tier Service Provider: “Prices are remaining fairly flat with the only variance being how much proppant is used and whether or not some gel is used.”

                                                                              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. Participants included four managers or sales personnel with well service companies and four completions managers or consultants working for E&P companies. Interviews were conducted during late May 2016.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Eagle Ford]

Total Respondents = 8

[Fracking service providers = 4, Operator consultants = 4]

1. Has demand for pressure pumping equipment grown, remained the same or shrunk in second-quarter 2016 compared to the first quarter?

Remained the same:

5

Declined:

2

Grown:

1


2. Are the number of DUCs increasing, decreasing or remaining the same compared with three months ago?

Remain the same (0%):

3

Increasing by 5%:

5

Average:

Flat to up slightly


3. 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

# Responses

Gas Price

# Responses

$55

2

$2.50-$2.99

3

$56-$60

6

$3

5

Average $57

8

Average $2.88

8


4a. On average in this formation, how long does it take to bring a DUC online?

4-5 days:

3

5 days:

5

Average range:

4 to 5 days


4b. Does the time to bring a DUC online differ between wells drilled on a pad vs. a single well?

Time saved between 10% to 20% per well on pad:

8


5. In your estimation, what is the total hydraulic horsepower in your area? (All providers combined)

250,000 hhp:

4

251,000-350,000 hhp:

4

Average:

281,000 hhp


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

10-12:

4

13-15:

4

Average:

~13 crews


7. 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:

9,719 feet

Average horizontal lateral length:

7,250 feet

Average number of frack stages:

26

Injection rates (barrels per minute):

68

Average number of frack stages per day:

6

12-hour or 24-hour:

24-hour

Required hhp to frack Eagle Ford well:

~24,000 hhp


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

$25,000-$30,000:

4

$31,000-$50,000:

4

Average:

~$32,000 per stage


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

Remain the same:

8


                                                                              End Statistical Survey