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Contractors expect workover rates to remain flat for the remainder of 2016, even with growing activity in the Greater Rockies’ Uinta Basin and Niobrara Shale.
Pricing remains steady and bid inquiries are up for Midcon workover services. Demand was actually on the cusp of increasing in the second quarter until weather interrupted field work.
Demand for workover rigs in the Permian Basin has remained low with the majority of work focused on maintaining producing wells to keep cash flowing.
Eagle Ford operators need a sustained $50 oil price to stoke demand. Meanwhile, service companies are almost exclusively working on maintenance projects as drilling slows in the shale play.
No completion work for Bakken workover contractors this quarter though pricing has stabilized. Meanwhile, fracking crews in the area dwindle, according to Hart Energy’s Heard In The Field report.
Well service work has focused on necessary maintenance and little else in the Marcellus Shale area, according to Hart Energy's Heard In The Field survey respondents.
Several respondents of Hart Energy's Heard In The Field survey said smaller “mom and pop” workover companies were either leaving the Midcontinent region or shutting in operations until prices recover.
Workover contractors in dry gas basins are hunkering down as several operators go dormant or redirect capital spending elsewhere, according to Hart Energy’s Heard In The Field survey.
The ‘winter of discontent’ continues for Permian Basin workover providers. Routine maintenance now accounts for 80% of job mix. Meanwhile, average hourly rates drop further.
Some Eagle Ford operators are working as cheaply as possible to get whatever work they can. Contractors report a majority is focused solely on routine maintenance, done only as necessary.
Operators in the Bakken Shale are now announcing 2016 capital spending reductions that indicate significant cutbacks in store. Meanwhile, workover contractors grapple with the implications.
Hourly workover rates dropped 10% in the last 90 days, according to Hart Energy’s Heard In The Field report. Contractors say the region needs gas prices above $3 before activity improves.