Synopsis

Predatory pricing, suspended operations and a pause in completions characterized responses to Hart Energy’s Permian Basin downhole completions survey.

One of the large-tier pressure pumpers is cutting prices further, despite negative margins, in a gambit to capture market share in a tough market.

For those jobs underway, slickwater coupled with plug and perf remains the dominate completion methodology, though a few operators are using sliding sleeves, hybrid gel and ceramics. The latter technique constitutes very low market share, however.

Spacing, at 250 feet per stage, remains unchanged. The number of wells per pad has gradually increased over the last year and averages five in the latest survey.

Refracks are under discussion but few operators are moving forward with a refrack program because of market conditions.

Operators are using a flush and re-stimulation of older horizontal wells and reporting good results, though the remediation effort represents less than 2% in market share.

Zipper fracks have seen market share decline further to 35% of completions, down from 42% in the last survey.

Average sand use for proppant rose modestly to 8.8 million pounds per lateral in this survey. Some operators are switching to less expensive, lower grade brown sand to save on expenses.

Watch for the next Heard In The Field report on the Permian Basin downhole completion market in June 2016.

Part I. – Survey Findings

Among Survey Participants:

  • Slickwater Completions Most Common
    [See Question 1 on Statistical Review]
    Seven respondents reported that slickwater completions are the most common in the region, though one reported a preference for gel and ceramics on some wells.
  • No Changes In Completion Practices Expected In Near-Term
    [See Question 2 on Statistical Review]
    ​All respondents expect few or no changes in completion practices in the near term. However, an operator reported pausing drilling and completions for this quarter. In addition, a service provider reported closing down frack operations completely.
    • Mid-Tier Provider: “There is no change in preference for slickwater in this environment, but some are still exploring more cost-saving ideas.”
  • Spacing Between Frack Stages Averages 250 Feet
    [See Questions 3a, 3b, 3c on Statistical Review]
    ​Spacing ranges between 200 feet to 350 feet in the Permian Basin and averages about 250 feet. All respondents have kept spacing about the same this year.
    • Mid-Tier Operator: “Spacing is staying about the same since wells are responding well.”
  • Plug And Perf Most Common Fracking Technique
    [See Question 4 on Statistical Review]
    ​All respondents reported that plug and perf completions are the standard fracking technique in the Permian now. Two respondents also use sliding sleeve in Permian as well.
    • Top-Tier Operator: “We do both plug and perf and sleeve jobs, but almost all are completely one well at a time now.”
  • Very Few Refracks At Current Oil Price
    [See Question 5a and 5b on Statistical Review]
    ​Nearly all respondents concurred there is very little interest in refracking during the current low oil price environment. However, one respondent reported that remediation is boosting their activity, but it is not full refrack work. Instead, it involves a flush and re-stimulation of declining horizontals with good results. No new refrack tools are reported in the play.
    • Mid-Tier Operator: “There is nothing new being reported for refrack since there is little incentive to do so until the oil price recovers.”
  • Multi-Well Pads Average ~5 Wells Per Pad
    [See Question 6 on Statistical Review]
    Average number of regional wells reported per pad is about five. Reports ranged from four to six wells per pad in the region.
    • Mid-Tier Operator: “Four to six wells per pad are most common, but most wells are completed one at a time currently.”
  • Zipper Fracks Account For 35% Of Completions; Solo Fracks Account For Remainder
    [See Question 7 on Statistical Review]
    The percentage of zipper frack completions reported among respondents is 35%, down from 42% in the December report. The remaining 65% of wells are fracked using the solo frack on one well at a time.
  • Sand Remains Most Common Proppant
    [See Question 8a and 8b on Statistical Review]
    Natural sand is reported as the most common proppant in the region and averages about 8.8 million pounds per well, up somewhat from the 7.9 million pounds per well reported in December. Respondents reported 20/40, 40/70 and 100 mesh are most common. Two clients have recently changed to less expensive brown sand. A total of 95% of proppant reported is natural sand and the remaining 5% is ceramics.
  • Three Perf Sets Per Stage Most Common
    [See Question 9a and 9b on Statistical Review]
    All respondents reported three to four perf sets per stage with enhanced horizontal completions methods currently, same as six months ago.

End Survey Findings

Survey Demographics

H A R T E N E R G Y researchers completed interviews with eight industry participants in the downhole completions segment in the Permian Basin. Participants included five sales professionals with fracking companies, two consultants with E&P companies, and one operator. Interviews were conducted during mid-March 2016.

Part II. – Statistical Review

Downhole Completions

[Permian Basin]

Total Respondents = 8

[Fracking service providers = 5, E&P consultants = 2, Operator = 1]

1. What common practices are used in your area for completions?

Slickwater:

7

Hybrid:

1*

*One respondent acknowledges slickwater most common in region but some operators request hybrid completions using gel.


2. Do you see that changing over the next three to six months?

No changes expected:

8


3a. Is spacing between stages closer now than a year ago?

Same:

8


3b. What is the average distance between frack stages in your area?

90- to 100-foot spacing w/coil fracks using sleeves:

2*

200- to 249-foot spacing:

2

250- to 350-foot spacing:

4

Average spacing:

~250 feet

*Not used in average


3c. How are you fine-tuning your stimulation program downhole?

Large sand volume slickwater:

4

Large volume brown sand slickwater:

2

Using coil fracks:

2


4. What fracking technique is most common in your area?

Plug and perf:

8*

*All respondents acknowledged plug and perf is most common, but two reported a preference for sliding sleeves.


5a. Looking at the number of total frack jobs in your area, what percentage are new fracks and what percentage are refracks?

New wells:

98%

Refrack or remediation:

2%


5b. Are there any new downhole tools being tried in your area?

Nothing new:

8


6. What is the average number of wells being completed per pad in your area?

4 wells:

4

4-6 wells:

4

Average:

~5 wells per pad


7. What percentage of fracks drilled from pads are zipper fracks vs. individual fracks?

Zipper Frack

Solo Frack

# Responses

0%

100%

1

40%

60%

2

50%

50%

3

25%

75%

2

Average 35%

Average 65%

8


8a. How much proppant (in pounds) are you using per well?

6-12 million pounds:

7

5-6 million pounds:

1

Average per well:

~8.8 million pounds


8b. On a percentage basis, how much proppant in your area is used by type?

Average Among Respondents

Natural sand only:

95%

Ceramic proppants:*

5%

*One respondent prefers using ceramics in deeper Wolfcamp and Bone Springs.


9a. How many perf clusters are typical between stages?

Average

3


9b. Is that more or less than six months ago?

Same: All respondents answered that perf clusters are within the range of three to four sets per stage with none reporting an increase over six months ago.


End Statistical Survey