US rig counts
The US crude oil rig count provided by Baker Hughes was 747 for the week ended December 15. Crude oil rigs had hit a low in the last week of May 2016. US oil rig counts were largely on an uptrend from then to July 2017, which supported strong volume growth for frac sand MLPs Hi-Crush Partners (HCLP) and Emerge Energy Services (EMES).
The above graph shows US crude oil rig counts over the last four years. As the graph shows, crude oil rig counts are flat to marginally down in the second half of 2017, which might indicate that the volume growth frac sand MLPs enjoyed for roughly a year may slow down a bit. This outlook might have pressured frac sand producers’ stocks, as we saw in the previous part of this series. We’ll discuss volume growth in the next part.
Crude oil prices are up nearly 9% year-to-date. Learn about the dynamics of oil prices and rig counts in Ignoring Oil Rig Data Could Cost Oil Bulls. Natural gas rigs were up by three to 183 for the week ended December 15.
Let’s discuss the growth in frac-sand volumes for Hi-Crush Partners and Emerge Energy Services next in this series.
Hi-Crush Partners’ (HCLP) capital spending in the third quarter of 2017 was $40.2 million, and the company expects to spend $7 million to $17 million on capital projects in the fourth quarter of 2017.
Frac-sand MLPs Emerge Energy Services (EMES) and Hi-Crush Partners (HCLP) are down more than 40% so far in 2017. In comparison, Fairmount Santrol Holdings (FMSA) is down 55% and U.S. Silica Holdings (SLCA) is down 39%.
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