Now discussing coiled tubing. Let me first say that we have complete confidence in the senior management team and believe that the coiled tubing business is still a very good business and it’s still an important service for Pioneer to offer. Long term we think we will be one of the best service providers in coil just like we are in well service and in wireline.
In a nutshell, the issue this quarter in coil was onshore utilization. It averaged below 60% and that cannot sustain the high fixed cost in that business. In the first quarter by contrast, we were averaging close to 70% utilization and the margins were very good.
Part of the problem in the quarter, we had two units that had previously been on term transition over to spot. In addition, we moved one of those units out of the Marcellus, which became the weaker market down to South Louisiana, and we’ve made a number of important personnel changes. So we think the outlook is good for coil. It may take a quarter or two to get things sorted out but we’re still optimistic about coil in the medium term and long term.
The offshore aspect of the business where we have three units has performed very well, very stable, steady pricing, steady utilization. And we just this month in August added our fourth unit to the offshore so that brings our total unit count currently to 11 and we have two additional land units on order that we should receive in September that’ll become operational probably in October of this year. So we end the year at 13 units in coil.Read the rest of this transcript for free on seekingalpha.com