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