Frac demand, pricing continue to fall; Frac fleet utilization ends 2015 at 46%

14 Dec 2015 IHS Markit Energy Expert

IHS-PacWest hosted a conference call on Thursday, December 17th at 9:30 am CST.

We are pleased to announce IHS-PacWest will be hosting a conference call on Thursday, December 17th at 9:30 am CST to discuss its outlook for the hydraulic fracturing market, based on our recently published PumpingIQ and WellIQ reports.

IHS PacWest forecasts that 15Q4 will be the low point for the North American hydraulic fracturing services market. IHS previously projected a Drilling & Completion (D&C) market recovery to begin in the last quarter of 2015 but the anticipated recovery is delayed by persistent low oil and gas prices. Looking to 2016, we forecast a 10% decline in horizontal wells spud, along with an 8% decline in horizontal wells frac'ed.

Hydraulic fracturing demand in the US Land market has fallen by 47% since 14Q4. Total US Land frac capacity saw a net decrease of 209k HHP, as newbuild equipment deliveries in 15H1 were outpaced by retirements and fleet attrition. Equipment manufacturers report empty order books for new frac equipment and significantly lower prices for consumables. Due to decreased D&C activity, an increasing percentage of frac capacity has been stacked, reaching a total of 9.1 million HHP in 15Q4. More than 50% of stacked capacity (nearly 35% of existing capacity) is considered cold-stacked and increasingly likely to transition to "effectively retired" status.

Hydraulic fracturing services pricing fell nearly 38% in 2015 compared with year-end 2014. While the majority of price concessions have now taken effect, we anticipate small decreases in some basins over the course of 2016. In light of continuing declines, an increasing number of frac services providers have been willing to stack equipment rather than work at pricing levels that would not allow them to service and maintain equipment.

The market update conference call was held for Thursday, December 17th at 9:30 am CST. To watch the webcast replay, register here. The call is open to the public.

Staff Writer, December 14, 2015


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