This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Frac Market Oversupplied By 25% But Light At End Of The Tunnel

HOUSTON, Feb. 21, 2013 /PRNewswire/ -- PacWest Consulting Partners has just published the 12Q4 release of its PumpingIQ report, which monitors the global hydraulic fracturing market.  PacWest analysis concludes that the gap between aggregate US hydraulic fracturing supply and demand peaked in the fourth quarter of 2012.  PacWest estimates that US hydraulic fracturing capacity utilization in the fourth quarter of 2012 averaged 75%, resulting in an average capacity utilization of 83% for the year. 

"The US land rig count fell further than expected in the last quarter of 2012, leading to a record 4 million horsepower of frac capacity sitting on the sidelines for lack of work," says Christopher Robart, a Principal with PacWest and the lead author of PumpingIQ.  "We estimate that aggregate frac pricing in the US fell by 15% in 2012 and, although the free-fall in frac pricing that we have seen since early 2012 has finally slowed down, prices are still soft in most plays across the US.  However, we finally see light at the end of the tunnel and expect pricing to stabilize in most plays by the second half of 2013.  We expect aggregate pricing to fall by an additional 4% in 2013."  

Rig count and well completions are expected to rise throughout 2013, but not enough to structurally change the supply/demand balance in the frac market.  PacWest forecasts that capacity utilization will increase to 80% by the fourth quarter of 2013, still only enough to decrease excess capacity to 3.2 million horsepower, 20% of available capacity in the market.  Conditions in the frac market are expected to improve through 2014 but only enough to increase average 2014 capacity utilization to 82%.

PacWest estimates that global hydraulic fracturing capacity totaled 21.9 million HHP at year-end 2012.  PacWest forecasts that global hydraulic fracturing capacity will grow to 37.4 million HHP by the end of 2017, a 5-year increase of 71% between 2012 and 2017.  Markets outside North America are expected to experience significant growth, increasing from 20% of global capacity to 42% of global capacity.

As a part of the 12Q4 release of PumpingIQ, PacWest published the first detailed study of the hydraulic fracturing market in the Middle East / North Africa (MENA) region. We forecast that frac capacity in the MENA region will grow rapidly from almost 0.4 million horsepower at year-end 2012 to nearly 1.8 million horsepower by year-end 2017, with much of the capacity targeting tight gas. Saudi Arabia and Oman are expected to account for the vast majority of the growth in the market, accounting for nearly 80% of regional capacity in 2017.

As rig and well completions counts have diverged in recent years, better estimates of well completions have become more important as the critical metric for properly measuring and forecasting oilfield activity.  The PacWest team has been regularly forecasting well completions for internal use.  After numerous requests from clients and subscribers, the firm has agreed to launch a stand-alone product focused on well completions, called WellIQ.  The report is a quarterly-released subscription product that forecasts well completions on a play-by-play basis for both the US and Canada.  The latest analysis indicates that 23,448 horizontal/directional wells will be completed in the US in 2013, an increase of 3% over 2012, with an additional 7% increase in horizontal/directional well completions expected in 2014. 

PacWest will host a conference call on Monday, March 4th at 10:00 AM Central Time to brief its customers and all other interested parties on its view of the market.  Call details are provided below.

Conference Call Dial-in: +1 800 830 3581 Passcode: 2922791

WebEx Presentation https://meetingvisuals.webex.com/meetingvisuals/j.php?ED=224214512&UID=499204927&RT=MiM3

About PacWest

PacWest Consulting Partners is a boutique strategy consultancy and market intelligence firm that specializes in the energy, industrial, and resources sectors.  Much of its work is focused around the oilfield and the many industries that supply critical products and services to it.  With the explosion of unconventional resources in North America, the energy landscape is changing quickly.  PacWest is at the forefront of that change, helping companies better understand the market and develop and implement new strategies to position themselves for growth.

PumpingIQ is the only market research product that provides a bottom-up view of the US hydraulic fracturing market with granular counts of frac fleets and capacity, demand estimates, capacity utilization forecasts, and pricing forecasts.  It also highlights major market trends for each play in real-time, gathered from on-the-ground field staff in each play.

WellIQ, PacWest's newest quarterly updated market research subscription product, provides a 3-year forecast of total well completions by each major US and Canadian play.  It also includes a forecast of drilling rig counts, drilling efficiencies, frac stages completed, and multi-well pad penetration.

Contact: Larianna Dunn, 1-906-430-7110, ldunn@pacwestcp.com

SOURCE PacWest Consulting Partners

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,118.23 +66.50 0.39%
S&P 500 1,985.27 +11.64 0.59%
NASDAQ 4,461.3980 +36.6940 0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs