The Sand Plateau, Cashless Profits, and More From Earnings Season

The Sand Plateau, Cashless Profits, and More From Earnings Season

Key Trends:

  • Pressure pumpers continue to see utilization rates rise for equipment while trying to keep up with the demand of hiring new crews.
  • Operators hold plans steady during the quarter with some reducing CAPEX plans for the year due to lower than expected commodity prices.
  • DUC count rises due to increased rig activity in the first half of the year as operators put a focus on drawing down inventory.
  • Drillers continue to push for rig automation to reduce boots on the ground and automate certain processes during drilling.

The Details:

  • Patterson-UTI Energy (NYSE: PTEN) increased full year capex by $130 million in preparation for rig upgrades to accommodate customer demand for additional super-spec rigs. The company expects 80% of their 1.5 million HHP to be active by the end of the year.
  • QEP Resources (NYSE: QEP) announced their acquisition of almost 14,000 net acres of high quality development acreage in the Permian Basin for $732 million, located in Martin County, TX. This expands the company’s Permian Basin drilling inventory by over 60% to nearly 1,900 gross potential horizontal locations in the core of the northern Midland Basin.
  • Hess Corporation (NYSE: HES) decreased E&P capital by $100 million from previous guidance as the company announced to sell their enhanced oil recovery assets in the Permian Basin for $600 million last month. Hess expects to move to a 60-stage completion design as their new standard, while continuing to test high proppant loadings up to 140,000 pounds per stage.
  • Chesapeake Energy (NYSE: CHK) cash flow from operations moves negative again and it appears from CHK’s 10-Q the company is financing operations. Profits without cash flow signals more warning signs for investors.
  • Since April, Helmerich & Payne (NYSE: HP) reactivated 17 rigs, 10 of which were placed into service in the Permian, increasing its total rig count in the Permian to 91.
    • Average rig expense per day decreased by 9% to $14,256 and are expected to decline to roughly $13,700.
    • H&P increased capex to $257 million from $200 million, a large portion, $100 million, going towards maintenance.
  • Whiting Petroleum (NYSE: WLL) reduced capex by 14% bringing it to $950 million.
  • Independent Contract Drilling (NYSE: ICD) expects day rates to stabilize in the high-teen, low $20K range. ICD seeing steady demand growth for pad-optimal class rigs as customers migrate to larger, more complex pads

  • Anadarko Petroleum (NYSE: APC) reduced capital plan by $300 million. The company added completion crews, now up to six in the Delaware Basin, to work through its DUC inventory. APC expects to complete 50% more wells in the DJ Basin in second half of 2017 than completed in the first half of this year.
  • Carbo Ceramics (NYSE: CRR) reached full utilization at the frac sand plant in Marshfield, Wisconsin. The company is also utilizing idled railcars to generate profit by sub-leasing them to other frac sand providers to generate cash flow.
  • Schlumberger (NYSE: SLB) announced that the company’s frac calendar is booked through Q4’17. Schlumberger remains on track to complete its OneStem joint venture during the latter part of the year which will provide additional HHP, as well as, a full suite of multi stage completion technology.
  • EQT (NYSE: EQT) announced they will be suspending their Utica test program to focus on its’ Marcellus development acreage and anticipates turning in line 113 wells during the second half of 2017 using seven crews. EQT estimates well development capex for 2017 to be $1.3 billion.
  • US Silica (NYSE: SLCA) announced pop-up sand transloading that will be pre-loaded sandboxes in various areas of the Permian. The company expects 5-10% sequential price/ton increases in 3Q17 and sees no slowing of proppant intensity based on their customer requests.
  • Fairmount Santrol (NYSE: FMSA) demonstrated strong results with 24% growth in total proppant compared to the Q1’17. FMSA shared strong market demand numbers and expects continued growth in local Permian sand as well as differentiated Northern White 40/70 frac sand.

 

Find the drilling, completion, and production data behind the earnings calls

 

 

 

 

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