Infill Thinking Lifting the O&G knowledge curve

Land drilling / pressure pumping hybrids Patterson-UTI and Seventy Seven Energy have agreed to join forces as 2016 draws to a close. Patterson-UTI will purchase Seventy Seven Energy for $1.76bn in an all-stock deal that includes the assumption and repayment of $336mm of net debt. This deal isn’t a bargain, as …

If OPEC’s November 30th decision to cut production was like adding tinder to smoldering embers, then progress made over this past weekend was like dumping gasoline on the fire. Lower 48 oilfield activity will gather steam (and quickly) in early-2017. As the upstream supply chain tightens early in the new year, …

Back in October, the North American land market was bracing for a seasonal slowdown into year-end. Here’s the warning Halliburton CEO Dave Lesar issued on a conference call about 6 weeks ago: “Based on current customer feedback we remain cautious around customer activity due to holiday and seasonal weather-related downtime. Our customers …

Compared to PDC Energy’s budget release earlier this week, Chevron’s 2017 continuing budget cuts are a stark reminder of the divergence theme we first wrote about in early-November. That said, these budget cuts are impacting most every area except one, the Permian. We break down the majors budget for subscribers …

In US onshore markets, pipe has long been approached as a cumbersome consumable by the E&P industry. Suppliers haven’t historically provided much hand holding along to go with tubes sold, and many operators have found themselves practically in the pipe business themselves. In the conventional model, operators are invoiced when …

We visited the sprawling $36mm Tenaris Midland Service Center this week. From this new Permian Basin facility, Tenaris is introducing Rig Direct™ to the US shale plays. Here Tenaris is running OCTG (casing and tubing), sucker rods, coiled tubing, and accessories in 24/7 operations. The Midland Service Center is the …

Pioneer Natural Resources is known for progressive thinking on partnerships. The company’s effluent water deal with the City of Odessa is a good example of how the company builds novel relationships to drive costs down. So when Tenaris proposed an unusual alliance around shared yard space, Pioneer listened. The end …

Offshore drilling contractors have been signing deals with shipyards to delay taking rig delivery for several years now. With no visibility on work, it’s better to leave rigs on the docks where they took shape than to store them somewhere harsher. This morning Atwood announced a delay deal on a pair of …

We are in Midland/Odessa this week for meetings and site visits. The vibe here now is very different from our last visit 10 months ago. There is more field traffic on I-20, parking lots are fuller, and there is a stirring in the yards. In this post we discuss firsthand intel from …

PDC Energy is out with their 2017 spending program Monday morning, the first budget we’ve seen released since OPEC announced a production cut last week and sent crude oil prices up 10%. It doesn’t disappoint. We delve into the details and warn why readers should not extrapolate the percentage increase …

Although not everyone is happy about it, we think Chesapeake’s new logo looks pretty good. Actually, really good. As reported by The Oklahoman last week, the company is rolling out a re-brand starting in January 2017, reflecting their evolution from ambitious young natural gas company (remember the blue flame in the …

While the rest of the world focused on OPEC on November 30, US operators were focused on making their tight oil wells more effective with cutting edge innovation. We spent OPEC day in Houston with 35 senior US completions executives at the Darcy Completions Forum, squarely focused on emerging technologies …

The new Weatherford CEO is reportedly in the process of undoing his predecessor’s hydraulic fracturing business plan. If what we’ve been told by industry contacts is true, Krishna Shivram (pictured left) is throttling back frac operations in dramatic fashion. This would be the second big move he’s made in three weeks at the …

BJ Services returned to the scene as a standalone company late Tuesday as Baker Hughes announced the pressure pumping divestiture they talked about before the GE deal and confirmed during the GE announcement. We break down the deal including observations about value, Goldman Sach’s interesting history with BJ Services, and some …

There’s an OPEC meeting this week, have you heard? In a Google News scan Monday morning, we counted more than 100 articles about OPEC published in the last 24 hours alone. Enough will be written this week about the pageantry in Vienna to fill a small library. Endless speculation leading up …

Since inception, hydraulic fracturing and shale exploitation have been fraught with controversy. Initial opposition mostly came from the far left and environmentalists. So called “fracktivists” include bands of protesters, lobbyists pushing for regulation, and filmmakers documenting mythical terrors. These outsiders have presented challenges for the industry ranging from mild annoyances to outright banishment …

Helmerich & Payne’s FlexRig3s have made the company the best-in-class US land driller for a decade. Ask any analyst who the best land driller with the best fleet is and they’ll say H&P almost unanimously. But will that always be the case? Now for the first time in a decade, management is having …

Permian acreage values are changing rapidly, frustrating those who want in and providing a windfall to incumbent operators. What some are calling an acreage valuation bubble in the Permian may be just the tip of an inflation iceberg in the play. A tsunami of capital targeting deals in the region …

For service and drilling contractors that want a piece of Saudi Aramco’s $30bn annual budget, a line has been drawn in the desert sand. As we write, the NOC is making some of its first big moves to make good on an ambitious local content plan unveiled about a year ago. …

Last week, we rolled out an installment in our Thinking Ahead series taking a forward look at US production and estimating 2017 production levels. We’ve also been paying attention to operator commentary on 2017 drilling programs and capex. In this post, we add it all up and put our necks on the …

The biggest regional contributor to the US Shale Revolt will be the Permian Basin. The Permian is the only unconventional oil play where production has not fallen in the downturn. In fact, Permian production today is up 13% since that fateful OPEC meeting two years ago. Following it’s conventional production …

The period from 2009-2014 was affectionately dubbed the US Shale Revolution. During the “revolution,” 40 years of American production declines were reversed in 5 with horizontal drilling and fracing. The revolution was a capital-intensive growth phase enabled by high oil prices. Today, we submit a new term to describe the …

On Wednesday morning (11/16), Weatherford sold 84.5mm shares at $5.40/share in a registered direct equity offering for $456mm. Last week, Infill Thinking predicted that Weatherford would raise equity capital following the stock’s 33%+ gain on CEO Bernard Duroc-Danner’s departure. The market reacted positively to today’s equity raise, Weatherford’s stock rising another 3% …

Two months ago, we penned a deep dive on the offshore drilling outlook, concluding that things still must get worse before they get better. Atwood’s conference call yesterday provided a good theory test, and we came away with confirmation of our multi-year hard landing view. Here are the most important fundamental …

In the decade we’ve been covering the oil business, we can’t recall another period of time when technology and efficiency gains were occurring this fast. And as students of this industry, we’d argue that there’s been no time in history when O&G industry methods were advancing at today’s pace. Globally, human …

There were a lot of smart things about the Nabors analyst day last week. One of those was the timing. Nabors was smart to host its event after most of the other contract drillers hosted their earnings conference calls in the weeks leading up to the event – the timing …

On Thursday, we attended an all-day event hosted by Nabors Industries in Houston for analysts and investors that follow the company. Nabors went all out on this one, rolling out a 160-slide deck at a full day event that included nine presentations from senior Nabors executives, a rich multi-media campaign, and a half …

Developing November 9, 2016 4pm central. What Happened: On Wednesday afternoon, Weatherford announced the departure of Chairman and CEO Bernard Duroc-Danner, 63, effective immediately. We explore why and what’s next. There’s a lot more to this story… Login to see the full update…  To read this update and receive our research newsletters, you must …

The shock of Trump’s come from behind victory will reverberate throughout the world, the capital markets, and even the oil industry for multiple news cycles. The upset is being called the biggest US news story since the 9/11 tragedy. An important O&G win in the Rockies Tuesday night was overshadowed by …

We examine an interesting correlation between Hilary’s lead and the rig count bottom. There’s a lot more to this story… Login to see the full update…  To read this update and receive our research newsletters, you must be a member. If you are new to Infill Thinking, or your membership …

An internal challenge set by the Statoil front office this year tasked engineers with something that would have once been thought impossible: turn a profit on a major new Barents Sea field development, the Johan Castberg, at $40 oil. Is $40 is the new $70? Statoil’s internal hurdle was lowered earlier this …

  Our regular weekly analysis of Baker Hughes rig count statistics is below, but first some campaign speech. This weekend, we are taking a break from the political rhetoric to look at drilling campaigns. For the first time in two years, the US Independents are flexing up their drilling programs. …

Leading Independent E&Ps like EOG Resources and Continental Resources are moving quickly now to complete their excess drilled but uncompleted (DUC) well inventories. The recent increase in oil prices into the $45 – $50 range was the signal to complete ’em if you got ’em. In this update we review the specifics …

Shares of Apache sank 7% Thursday, closing at their lowest level since the Alpine High wet gas discovery was announced in early-September. The transformational Reeves County discovery has made Apache the darling of investors for the past several months. Here’s what’s new… There’s a lot more to this story… Login to see …

As Infill Thinking readers are well aware, the protracted downturn for the industry as a whole has been particularly hard on offshore businesses. At the extreme end of the offshore pain spectrum sit the offshore supply vessel (OSV) contractors. Historically a commoditized service line with few barriers to entry, the OSV landscape now …

BP and Shell updated their spending outlooks Tuesday morning. The two Majors echoed recent reports from their peers by again lowering planned capex spending. As Independents selectively spend a little more in 4Q16 and prepare to reverse their budget cuts next year, the Majors continue to systematically lower their total spend. Optically, …

Although it may seem early to some, another fleet improvement cycle is underway for the US land rig fleet. We covered the specific upgrade programs of several leading land drillers last week in this post. It’s a relatively humble reconstruction cycle financially speaking, involving more discrete equipment upgrades than overhauls or …

Infill Thinking’s launch 10 days ago coincides with the arrival of a young oilfield recovery. The definition of recovery is different this time – shallower and more gradual than before – but there is no doubt that, at a minimum, oilfield contraction is abating. Against this backdrop, our early updates …

After four days of speculation and head scratching over what kind of deal GE and Baker Hughes might be concocting, the companies announced an extensive partnership Monday morning, essentially a merger of GE O&G with Baker Hughes. The deal is more extensive than we (and many others) originally expected late last week. …

It’s been a busy 24 hours. Since Wednesday morning, a dozen upstream management teams have provided business outlooks via quarterly conference calls. While drinking from this information firehose, we’ve been logging the highlights. In this post, we dissect the eight most interesting things we took away for the oilfield business at …

We discuss the breaking news that GE has come forward as a potential partner for Baker Hughes and evaluate the merits and fit of such a partnership. There’s a lot more to this story… Login to see the full update…  To read this update and receive our research newsletters, you must …

As Baker prepares to exit the horsepower game, Weatherford is in no hurry to send frac packing. After reactivating 3 spreads between September to December, the company will end the year at 90% marketed utilization. Weatherford is not selling its million horsepower fleet, at least not any time soon. There’s a lot more to this story… …

For the past six months, Baker Hughes has publicly rethought its involvement in the pressure pumping business. Now a material transaction is possible before year-end. The initiative is part of the big push underway by all of the Big 3 oil service companies to lighten their asset bases. Said another way, the Big 3 …

Inside of 24 hours, two highly leveraged US onshore oilfield services companies – Basic Energy Services and Key Energy Services – each delivered Chapter 11 bankruptcy news to the market. Neither development comes as a surprise as both companies have been working on restructuring arrangements for the better part of 2016. But the timing …

Transocean’s fleet status report released late Monday afternoon showed that three more midwater semis have been selected for scrapping. At Infill Thinking, we now track 98 offshore rigs that have been retired since the downturn began in 2014. These 98 include the Transocean Driller, Transocean Winner and Sedco 704, which Transocean now plans to scrap this quarter. …

For the first time in more than two years, it feels pretty good to be a North American land drilling contractor right about now. Beyond the headline rig count increases we’ve all heard of, other important industry metrics are moving upwards as well. The North American land drillers are the tip of the spear …

As we initiate our weekly rig count update here at Infill Thinking, it is nice to be writing about growth again for the first time in two years. Since the May 27, 2016 bottom, the US land rig count is up 154 rigs or +41%. Recent growth has been largely driven …

On Schlumberger’s conference call Friday morning, CEO Paal Kibsgaard made one central theme very clear. He is preparing his organization for growth again. Conversations with almost every Schlumberger customer on pricing increases have begun. Outside of Asia Pacific, Kibsgaard sees tender shoots of recovery sprouting in every market across the globe. There’s a …

Much has been said lately about deepwater lagging onshore in any sort of recovery. Rightly so, particularly for new drilling. But this doesn’t mean deepwater is dead in the water. Instead, it means the recovery could look quite a bit different this time. We got some clues about the equipment mix shift …

On Wednesday, Halliburton kicked off earnings season with a tidy report that boosted the stock by 5%. In other posts, we covered our key takeaways from the press release and a significant tone shift that has implications for future upcycles. Seven key observations about the competitive landscape are discussed here, but first we pause for …