Proppant Insights: Can a Legacy Pressure Pumper Return to Former Glory?
Well services companies suffered through harsh conditions during the last 18 to 24 months. Weatherford (NYSE: WFT), along with many others, are no longer in hydraulic fracturing business. BJ Services returns to a much different Lower 48 well services landscape.
Halliburton (NYSE: HAL) gained strength in the Lower 48 market moving from 27% in 2015 to 30% in 2016. Schlumberger (NYSE: SLB) is the number two pressure pumper in the Lower 48 with ties to large independents in the Eagle Ford and Permian Basin. During 2016, Schlumberger replaced Baker Hughes, now the number three pressure pumper in the Lower 48. HAL and SLB used this cycle to gain market share with well delivery solutions that the smaller pressure pumpers could not match. Baker Hughes also lost share in key markets to Liberty Oilfield Services, FTSI, and Keane Group.
Well Services Gear Up for 2017
In 16’Q4, operators started completing the backlog of uncompleted wells across several basins. Continental Resources, Devon Energy, Whiting Petroleum, and Oasis Petroleum along with number other operators, reduced their DUCs. At the same time, well services companies made moves to acquire assets, customers, and gain footholds in critical areas.
Liberty Oilfield Services doubled their hydraulic horsepower to 500,000 HHP and expanded to the Permian and Eagle Ford with the Sanjel acquisition according to company reports. In the past, the company was strong in the Bakken where Liberty has pumped for Hess, SM Energy, Enerplus Resources, and Continental Resources.
Source: Energent Group
FTSI boasts 1.6 million HHP with a Lower 48 market share of approximately 5% in 2016. The company holds strong frac horsepower capacity in the Marcellus, Permian, and Rockies. Expect FTSI’s market share to grow in the Permian in 2017 due to relationships with top E&P’s including Shell, Devon Energy, EOG Resources, and EP Energy.
Keane Group (Pending: FRAC) filed for an initial public offering in December 2017. 57% of Keane’s hydraulic fracturing fleets are active today. Based on company reports, when Keane acquired Trican Well Services assets the company grew to 950,000 HHP. The majority of the deployed frac horsepower is in the Marcellus where Keane is a top 5 pressure pumper. The company will meet growing 2017 market demand in Permian, Eagle Ford, and DJ Basin due to horsepower capacity and locations.
Source: Keane Group
BJ Services has a rich history of industry leadership and in Q4’16 the company re-emerged through a Baker Hughes Incorporated (NYSE:BHI) transaction with CSL Capital Management and West Street Energy Partners. The announcement described BJ Services “with a combined capacity of 1.9 million hydraulic horsepower and 240 cementers, BJ is positioned with a strategic footprint to serve clients in all targeted basins.”
In the Lower 48 shale plays, the stacked hydraulic horsepower is due to a steady decline of BHI frac crews in the Permian, Bakken, Eagle Ford, and DJ-Basin. Energent Group estimates that 20-25% of the fracturing fleets are active today.
With an outstanding reputation and one of the largest frac fleets, expect BJ Services to show a strong return to the market.