hydraulic fracturing: services & equipment...include baker hughes/ge, halliburton, saudi aramco,...

Hydraulic Fracturing: services & equipment

Richard Spears

Spears & Associates

Tulsa

May 2018

T H E S P E A R S D I F F E R E N C E

John and Richard Spears lead the firm’s team of oilfield veterans and data analysts. Both brothers are former field

engineers and operations managers for oilfield service companies. The brothers also hold board seats in privately held

oilfield service companies active around the world, land and offshore. All four senior partners of the firm have

decades of experience in drilling, completion and production products and services. Some of the firm’s 350 clients

include Baker Hughes/GE, Halliburton, Saudi Aramco, ExxonMobil, Fidelity, Blackstone and H&P. The client breakdown

is 57% OFS, 27% Financial, 11% Oil Co. and 5% Consultants

R E P O R T S A N D P U L I C A T I O N S

Spears publishes the following quarterly deep dive reports: Drilling & Production Outlook; Oilfield Market Report;

Artificial Lift; Drill Bits; Directional Drilling; Cementing; Coiled Tubing; Completion Equipment; Hydraulic Fracturing;

Proppant; Well Servicing; Water Management; Wireline.

B R O A D E N I N G T H E I R R E A C H

In addition to their paid services, Spears & Associates is also increasing their reach through free weekly podcasts.

Weekly analysis, and an upcoming video series on YouTube

This Tulsa company and its affiliated data mining

firm, Oilfield Logix, worked for 350 clients in 2017.

With over 50 years of experience Spears &

Associates provides business planning, analysis,

activity forecasts and market research-based

consulting services to the worldwide petroleum

equipment and service industry.

100k 5k-10k 2 Weeks Listens to weekly podcast The

Drilldown Readers of Spears & Associates’

weekly Friday 300 word analytics report

Until the launch of their dedicated YouTube Channel

Remember This Chart

Day 1 is the best day of a well’s life…each successive day is worse

Take-away #1

Because US wells decline rapidly, 16,000 wells must be drilled & frac’d each year to keep US oil

output flat.

US new well drilling

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

2014 2015 2016 2017 2018

New Wells Drilled Per Year

Horizontal Vertical

Take-away #2

In 2017 and 2018 the US will drill enough horizontal wells to make

oil production rise.

The 2018 environment

Drilling Rigs

New Wells

Resv Footage

Sand & Water

1000 Rigs

27,000 Wells

215 M Feet

115 M tons

Rail Shipments of Sand

-

5,000

10,000

15,000

20,000

25,000

30,000

Q1 13 Q1 14 Q1 15 Q1 16 Q1 17

Tho

usa

nd

s o

f To

ns

NoAm Oilfield Spending

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015 2016 2017

MIL

LIO

NS

Domestic v. Intl Oilfield

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015 2016 2017

Mill

ion

s

NAM Intnl

Take-away #3

Lack of international investment in new well drilling is causing

foreign oil output to fall

Take-away #4

Even if international oil companies decided today to

ramp up drilling, first oil would be 5 years in the future

From site to drilling to frac

Frac job ~1979

Frac job from 30 years ago…this is how China fracs today

Frac job 3 weeks ago

100-stage frac on 3 wells in the STACK

Infrastructure today

Big Trend: Long laterals

0

500

1000

1500

2000

2500

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Q1

16

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q3

17

Q4

17

<6000' 6000-8000 Extended Reach

DrillingInfo

Big Trend: Intensity

1978 2018

Time to drill 1 well 60 days 15 days

Wells per pad 1 1 - 25

% horizontal 0% 75%

Days to frac 1 well 1 7

Proppant per well 0.1 million lbs 14 million lbs

Cost in 2018 $ $3M $6M

Frac % of total cost 10% 40%

Take-away #5

Frac jobs always grow in size and intensity.

This trend will continue.

US Frac Market

2014 2015 2016 2017 2018

Market $29,356 $16,173 $9,162 $19,502 $26,324

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Hydraulic Fracturing Market (Millions) 0% 5% 10% 15% 20% 25%

HAL

SLB

Keane

Liberty

FTS

PTEN

BJS

RPC/Cudd

ProPetro

CJES

USWellSVs

Calfrac

SPN

TUSK

BAS

QES

ProSvs

Others

2017 (Market Share)

Permian Frac Market

2014 2015 2016 2017 2018

Market $6,173 $3,643 $3,040 $7,272 $10,842

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Hydraulic Fracturing Market (Millions) 0% 5% 10% 15% 20%

HAL

SLB

Keane

Liberty

FTS

BJ

PTEN

RPC/Cudd

ProPetro

CJES

USWellSVs

Calfrac

SPN

TUSK

BAS

QES

ProSvs

Others

2017 (Market Share)

NoAm Frac HHP

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Incremental Frac HHP

(3,000,000)

(2,000,000)

(1,000,000)

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Frac Equipment Mfrg

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Mill

ion

s

Frac Pricing is Flat

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Q1

08

Q1

09

Q1

10

Q1

11

Q1

12

Q1

13

Q1

14

Q1

15

Q1

16

Q1

17

Q1

18

Q1

20

08

= 1

.00

Hydraulic Fracturing Cost Index

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Q1

08

Q2

08

Q3

08

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Q1

16

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q3

17

Q4

17

Q1

18

Q2

18

Q3

18

Q4

18

Q1

20

08

= 0

Quarter to Quarter Price Change

Oilfield Markets (B)

$- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0

Surface Data Logging

Inspection & Coating

Logging-While-Drilling

Casing & Tubing Services

Solids Control & Waste Management

Drill Bits

Contract Compression Services

Downhole Drilling Tools

Unit Manufacturing

Petroleum Aviation

Well Servicing

Floating Production Services

Production Testing

Surface Equipment

Supply Vessels

Coiled Tubing Services

Rental & Fishing Services

Specialty Chemicals

Completion Equipment & Services

Rig Equipment

Cementing

Geophysical Equipment & Services

Drilling & Completion Fluids

Artificial Lift

Directional Drilling Services

Wireline Logging

Subsea Equipment

Oil Country Tubular Goods

Land Contract Drilling

Offshore Construction Services

Offshore Contract Drilling

Hydraulic Fracturing

NoAm New Well Metrics

0

2,000

4,000

6,000

8,000

10,000

12,000

Q1

14

Q1

15

Q1

16

Q1

17

Q1

18

New Wells Drilled

0

50,000

100,000

150,000

200,000

250,000

300,000

Q1

14

Q1

15

Q1

16

Q1

17

Q1

18

Frac Stages Pumped

0

10

20

30

40

50

60

70

Q1

14

Q1

15

Q1

16

Q1

17

Q1

18

Reservoir Footage Drilled (millions)

0

10

20

30

40

50

60

70

80

Q1

14

Q1

15

Q1

16

Q1

17

Q1

18

Proppant Pumped (billions of lbs)

Free to investors

Weekly Podcast Weekly Analysis New Video Series