Broadly speaking, the North American pressure pumping market remains oversupplied. However, increases in wells drilled and stages fracked are helping to absorb some of the excess capacity that has kept pricing depressed.
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Quotes from 2Q13 earnings calls
“Additionally, in some cases, we’re seeing operators increasing the number of stages on horizontal wells performing as many as 40 stages per lateral in the Marcellus in certain examples. It’s our view that the resulting increased well count and stage count could absorb a meaningful percentage of the excess horsepower and help drive service intensity across all product lines.”
“Although we believe excess pressure pumping capacity has diminished since the first quarter due to rising demand, there is still an oversupply in the market. As a result, we anticipate that pricing pressure will persist to some degree across many North American basins in 2013.”
One listener asked Halliburton, “In prior conversations you indicated that you believe that the rest of the (pressure pumping) market could become balanced by early 2014 and absorb this 20% overhang. Do you still believe that timeline or is that beginning to be a bit pushed out?” The company answered, “Efficiency levels will run higher, rig count lower. I think the combination of both, sort of says it will probably have a little bit more—a little longer overhang in this pressure pumping market. But as we said, we continue to see some pricing pressure certainly variable across different basins. So, I guess the pricing pressure doesn’t go away as long as there is the overhang out there of excess equipment.”
“While the downwards pricing trend in U.S. land continued in the areas of drilling, stimulation and Wireline, although this slowed in pace during the quarter. However, continued strong drilling efficiency resulting in solid growth in horizontal wells and frac stages completed partly offset these headwinds.”
Baker Hughes (BHI)
“While our U.S. pressure pumping business posted its second consecutive quarter of improved revenue, share and margins as it executed more stages, with more 24 hour fleets than at any point in our history.”
“In the U.S., despite a flat onshore rig count, our pressure pumping product line delivered improved revenue, operating profit and operate profit margin for the second consecutive quarter. Improved fleet utilization and record stages per day, resulting from increased 24-hour operations, market share gains, and growing well count contributed favorably. These gains were partially offset by continued pricing declines.”
“Pressure pumping pricing remains low, but we believe it has stabilized. However, even in a poor pricing environment, we continue to increase profitability of this product line through the actions we’re taking to improve operating efficiency and fleet utilization, including the introduction of new technologies.”