And there was much rejoicing in the land.... Gas Prices

[GrayStangGT]

Raptor seems like a good truck for those shitty roads. Can anyone blame them?

Who was the lib we had around here that was saying it was a big waste of money for the border patrol to get a new fleet of raptors...lol

They run pretty nice down lease roads, but I'm sure 95% of them never see dirt. From what I read it was actually cheaper for the BP to get raptors vs modifying regular trucks and they were made specific for BP with less options and clothe interiors.

[Snatch Napkin]

Yeah, there's only one Raptor here. 8 F250's.

Sent from my SAMSUNG-SM-G870A using Tapatalk

[Strychnine]

US land rig count -8 this week.

-10 oil
-1 misc
+3 gas

787 total

[Strychnine]

..

Halliburton: "Drill Or Die" Mentality Could Lift US Rig Count In 1Q16

Halliburton held a conference call with investors this morning. Halliburton executives pulled back the curtain and revealed some good insight on the oilfield service market and how they are managing through these tough times. We will have a full digest of takeaways published soon, but in this weekly rig count update, we are focusing on what Halliburton said about the outlook for US drilling trends this morning.

Since August, our weekly drilling updates have warned of a sharp drilling decline coming in November and December as E&P budgets run dry. Today, Halliburton provided the same warning. CEO David Lesar said that most operators have exhausted their 2015 budgets and will take extended breaks starting as early as Thanksgiving. "Activity levels could drop substantially in the last five weeks of the year," he said. "In my 22 years in this business, I've never seen a market where we've had less near-term visibility."

Based on this comment from Halliburton and our own view, we now believe it is possible that the US rig count, which stands at 751 today, could approach the 600 level by year-end. That would be a level not seen in the US since the late-1990s. We expect to see a slow trickle of rigs hitting the sidelines into mid-November and then larger drilling declines in late-November and December.





Looking ahead though, there is a silver lining. Because of this anticipated nose-dive, Halliburton thinks that 1Q16 could mark the bottom of the cycle. The bigger the drop-off in 4Q, the bigger the bounce will be in 1Q as new E&P budget dollars kick in. Lesar said: "The first quarter could end up being a mirror-image of the fourth quarter. We expect to see a slow ramp-up beginning in January and improving from there."

Halliburton's call for a 1Q bottom is grounded in the belief that US producers operate with a "drill or die" mentality. Halliburton argues that whether or not plays breakeven may take a back seat to the Darwinian concept that operators must either drill or dismantle their companies. Here's how Dave Lesar puts it:

"I think there's actually a different way you need to think about the customer base in North America, especially the independent customer base. And that's essentially with the high decline curves that exist on these unconventional plays, they really are in drill or die mode. So if you go a year without drilling a well and your production starts to turn over, you're going to have to start drilling or else you're going to have to take your infrastructure apart that you've built up as a company. So I think that as we get to the end of the year, if these guys have money, they're going to drill it up, and that's just the fact of the matter. But I think that the real key is going to be the production declines you see and when these companies get to the point where they have to start drilling or they have to start dismantling their companies, and they're not going to want to do that."

Drill or die means US production could defy play economics, a concept we've written about, saying the US E&Ps are better named the "grit squad" rather than the "swing producer." Four months ago, in What Low Oil Prices? The US Independents May Make A Terrible Swing Producer, we wrote the following, which is very similar to Halliburton's comment today:

"The Independents clearly aren't on board with this swing producer notion. Embedded in their DNA is the need to keep drilling to offset production declines lest they self-liquidate. The growth model is one of self-perpetuation - drilling and producing serve the singular purpose of funding more drilling and production. Said more simply, the only reason to make money is so that it can be spent to make more, which will then be spent and so on. This MO is almost instinctual for most Independents, for those without it have already been weeded out."

The tough choice of drill or dismantle could buffer US oilfield activity against low oil prices next year as operators continue to spend (albeit at lower levels than in 2015) on drilling. But this "padding" may only delay the kind of real oil production response needed for the global oil market to heal.

In the meantime, buckle up for a tough end to the year if your business is leveraged to the US onshore oilfield.



Weekly North American Rig Count Statistics

The North America rig count fell 7 units last week, with declines primarily in US land oil drilling where rig count was down 10. With the US benchmark oil price volatile and in the high-$40s, we continue to believe the drilling outlook is skewed negative over the next 3-6 months.





As 2015 budget dollars begin to run out in 4Q, we see further declines coming. If our estimate of a 20% drop in 2016 spending proves correct, rigs may continue to trickle into yards during 1H16 depending on how deep 4Q cuts get (deeper 4Q cuts would mean we could see some bounce back in 1Q16).

While the weekly figures will ebb and flow, the recent leg down in oil prices jeopardizes stability, and the rig count trough that has recently been established (in the 800-850 range) has now been broken and we are stepping down again.





In Canada, the rig count rose 1 rig to 181 for the week. This seasonally strong period is tracking well below recent years.





A regional summary of rig counts by key basins is below. With 233 rigs working, the Permian is still the most active basin, and it was down 2 rigs on the week. The Eagle Ford, with 76 rigs running, is the second most active basin, and it was down 4 last week. With 64 rigs running, activity in the Bakken was down 1 rig.

[Snatch Napkin]

Yeah, Halliburton is making a big push.
We just won a contract that will keep my crew working solid all the way through to February of 2017.

[CexMashean]

Yay, gas is cheap'ish right now!

[KBScobravert]

Yeah, Halliburton is making a big push.
We just won a contract that will keep my crew working solid all the way through to February of 2017.

We are getting scraps once we finish this zipper frac we are on now. Rumors of changing us to a 6/3 and calling us a local crew (no hotel) sounds like changes designed to run off people before they have to lay us off. Our home yard is closed and called a 'satellite site'. I expect to see half of us stick it out. The other half, like me, will find another job.

[Snatch Napkin]

We are getting scraps once we finish this zipper frac we are on now. Rumors of changing us to a 6/3 and calling us a local crew (no hotel) sounds like changes designed to run off people before they have to lay us off. Our home yard is closed and called a 'satellite site'. I expect to see half of us stick it out. The other half, like me, will find another job.

6/3 with no hotel will put some hurt on the paychecks and run off the folks with a long commute.
They've already weeded out a few folks with those tactics.
I'm hoping to secure the last few pieces of my next move in the next week.

[KBScobravert]

6/3 with no hotel will put some hurt on the paychecks and run off the folks with a long commute.
They've already weeded out a few folks with those tactics.
I'm hoping to secure the last few pieces of my next move in the next week.

I am just waiting for a phone call and I am off to Africa with my previous employer.

[Snatch Napkin]

I am just waiting for a phone call and I am off to Africa with my previous employer.

Kickass.
I've got paperwork, tax number, insurance, and to pull the trigger on the last piece of equipment in a few hours.

[Strychnine]

Cool chart I came across this morning:

[Strychnine]

Well these guys are gonna be rich

Schlumberger Buys Into Silicon Valley Firm's Disruptive Frac Technology


If you haven't heard of Energy Recovery Inc., you have plenty of company. But if you don't know them yet, get ready to hear a lot more about them in the future. That's because the small, Silicon Valley-based industrial technology firm just signed a milestone deal with Schlumberger - one that could be a game changer for how wells are hydraulically fractured. We believe the technology (which is explained below) will prove disruptive given the step change in efficiency it promises, and we see this deal potentially forcing other frac companies to respond. The technology at the heart of the deal comes from the desalination industry, and other companies out there have similar concepts that Schlumberger's peers may have to make a move on (and adapt to fracturing) in order to keep up.


Shares of Energy Recovery, Inc. More Than Doubled Monday Afternoon After Announcing The Schlumberger Deal.


What's The Deal?

In a 15-year deal with Schlumberger Technology Corporation, Energy Recovery, Inc. agreed to provide the oilfield service giant with exclusive rights to Energy Recovery's VorTeq™ hydraulic pumping system.

Under the terms of the agreement, Schlumberger will pay a $75 million exclusivity fee immediately. Schlumberger will also pay two separate $25 million milestone payments (for a total of $50 million) as Energy Recovery meets certain requirements next year. And Schlumberger will pay Energy Recovery annual royalties for the duration of the license agreement subject to certain key performance indicators. For Energy Recovery, this deal is monumental. Even for Schlumberger, this is a fairly sizable technology investment. To put it into context, this deal as a percentage of Schlumberger's 2015 investment budget is about 5% and relative to Schlumberger's R&D budget over the past 12 months, the deal is about 11% (pre-royalties). If the technology performs as expected, we believe Schlumberger could end up acquiring Energy Recovery. Partnering fist and acquiring later is a strategy Schlumberger has used many times in the past to build out its technology portfolio.


What Does The Technology Do?

The technology allows pressure pumpers to avoid running frac slurry (the thick mixture of sand, water, and chemicals used in hydraulic fracturing) through their pumps. The technology uses an ultra-efficient energy exchange to reroute frac fluid away from centrifugal pumps. It is the first hydraulic fracturing manifold ("missile") built to isolate hydraulic fracturing pumps from the abrasive proppants that cause pump failure.

VorTeq changes the game by transferring energy from pressurized fresh water into low pressure frac fluid. The result is that frac crews can stimulate new unconventional oil wells without damaging their pumps with the sand flow through, which will reduce wear and tear on Schlumberger equipment. So running through the frac iron now will be fresh water, not the much thicker and more abrasive frac slurry. This should lower the need for replacement and maintenance, and it could be particularly important with the rise of superfracs that consume 2x to 3x the amount of proppant of a typical job.

In an emailed statement, Schlumberger told Oilpro: "We are looking beyond just the benefits provided by VorTeq system. The incorporation of the VorTeq system, along with other proprietary technologies, in Schlumberger’s next generation surface delivery systems, will help reduce fracturing pump wear and increase wellsite equipment reliability and efficiency." Joel Gay, Energy Recovery's chief executive officer, told Reuters: "From an economic standpoint we and our partner Schlumberger believe that we can materially reduce the cost per barrel to frac a well by virtue of going from the existing pump model to the new pump model." He quantified the savings that could result as being as much as $5 per barrel.

The product has been tested in the oilfield but not yet commercially deployed. With Schlumberger's leading infrastructure and fleet, the technology could now be deployed fairly rapidly.Per Energy Recovery Inc., the heart of the VorTeq system is Energy Recovery's Pressure Exchanger technology, which is the leading pressure energy recovery device in desalination with over 16,000 devices deployed globally.




The technology works by capturing and recycling otherwise wasted pressure energy in fluid flows, by a clean liquid-to-liquid energy exchange between high pressure and low pressure fluids. With a single moving part made of tungsten carbide, the system has been engineered to withstand tremendous pressure and harsh conditions and transfers up to 95% of the hydraulic energy from one fluid to the next.


Why Now?

In this downturn, we've seen the industry increasingly think outside the box when it comes to ways to reduce costs and increase efficiency. There is a new sense of urgency among both operators and their suppliers to get the cost per barrel down. VorTeq is an example of an outstanding innovation that can make fracing more efficient and cheaper. While Schlumberger very well may have done this deal anyway if oil was still $100 per barrel, it makes even more sense now in this ongoing downturn, which appears likely to be protracted. As VorTeq puts it, their product represents "a paradigm shift for the hydraulic fracturing industry as it significantly reduces maintenance costs associated with pumping downtimes and provides considerable redundancy efficiencies."

The technology gives Schlumberger immediate cost savings from lower wear and tear and in the medium term delivers Schlumberger capital efficiency since it eliminates redundant onsite equipment. These are savings that Schlumberger can share with its customers, ensuring that its crews stay busy during the downturn.

We applaud the deal, and we believe it helps cement Schlumberger's market leadership in technology and innovation. We look forward to hearing success stories from application in the oilfield soon. In the meantime, our conversations with others in the industry suggest more deals like this one - focused on efficiency and cost reduction - could be coming soon. Management teams across the board are evaluating ideas, process changes, and technologies that they might not have considered several years ago.


Who Is Energy Recovery, Inc.?

Per the company's website, the Silicon Valley-based firm recycles and converts wasted pressure energy into a usable asset and preserves pumps that are subject to hostile processing environments. Energy Recovery simplifies complex industrial systems while improving productivity, profitability, and efficiency within the oil & gas, chemical processing, and water industries. Energy Recovery products save clients more than $1.5 billion (USD) annually. Headquartered in the Bay Area, Energy Recovery has offices in Ireland, Shanghai, and Dubai.

[SBFORDTECH]

Yeah, Halliburton is making a big push.
We just won a contract that will keep my crew working solid all the way through to February of 2017.

Same here. The company we are working for in the Mississippian just scored a little over half a billion in financing.

[KBScobravert]

Well these guys are gonna be rich

Impressive. Such valuable time, money and physical labor is devoted to maintaining our fluid ends. Valve rubbers, bodies, seats, packings, oiler bearings and even monoblocks could all be saved. Right now we have to tear into each pump at a set point of frac'ing hours and inspect (swap valves) parts. Taking "pump work" out if the day would reduce the wear and tear on employees. Plus not having to uncouple iron from the pump/missile means less opportunity for leaks and iron failure. Spend less time being down and way more time getting stages crammed into the shift/day.

But then again, we were told that our new Q10 pumps were the future too. Meanwhile, they are only holding together for about 6 months. Even with a heavy maintenance schedule to inspect and replace worn parts, we are loosing 90k fluid ends due to pressures or manufacturing casting flaws.

[SBFORDTECH]

Jeez! Who is fronting the money?!?!

Foreign investment group.