We have updated our active frac crew count worksheet as well as compiled a list of frac crew anecdotes from Q2 earnings season. Our active tally now stands at ~111 fleets. This tally is derived from public disclosures, industry sources, company specific discussions and our estimates. Our worksheet is available to subscribers and we’ll promptly edit if/where mistakes have been made. We offer this as another leading research firm recently opined that the U.S. frac crew count was down last week to ~70 fleets. Perhaps they were referring to fully-utilized fleets as opposed to active fleets. If so, this could explain the delta. Nevertheless, we highlight our tally as it continues to move up as there is growing evidence E&P’s are moving forward with plans to complete DUCs.
Of note, within our count, we estimate the Permian crew count is now at ~50 fleets, although local contacts tell us it could be as high as 53 crews. We’ll confirm this number next week when we are in the Permian. Local contacts are also quick to point out the recent rise in crews includes a decent amount of spot work thus as some crews go back to work, others are being released. Therefore, the active fleet is always in flux.
As we review public company E&P completion anecdotes, it’s clear some of the work are spot-type jobs, but it’s also clear the completion trajectory is still moving higher. Our best guess is another 10-15 crews could go back to work this year. That said, because there is a lot of spot work, some incremental crews could simply replace existing working crews. Also, some frac jobs are one-day vertical jobs which means the workload can be inconsistent.
We maintain our original prophesy that the U.S. exits 2020 with 100-125 crews. Remember, several frac companies have called for a potential Q4 seasonal and/or budget-related slowdown. Meanwhile, some of the work described below points to a number of short-term projects. Nevertheless, if our working crew count is directionally correct, the obvious takeaway seems positive as it implies the U.S. count has nearly doubled since the Q2 trough. One observation which stands out to us, however, comes from a frac company who reports a nice jump in its working crew count, but says optimism should be guarded as working at EBITDA breakeven is hardly a good thing. We would agree which is why we often gripe about low OFS pricing. It needs to go higher for the industry to survive.
E&P Completion Observations.
| APA | No discussion of adding frac crews in 2H’20 |
| AR | Running one rig. Appears no change to this level during 2H’20. |
| BATL | Has 4 DUCs. Will react to market. Not clear if these get completed in 2H’20. |
| BCEI | No discussion of adding frac crews in 2H’20 |
| BRY | No discussion of frac crews. We assume zero additions. |
| CDEV | Will complete 5 wells in New Mexico in Q3, thus assume a fleet addition |
| CLR | Running one crew in Oklahoma. Does not appear company will add crews in 2H’20. |
| CNX | Running one crew with plans to stay at one crew into 2021. |
| COP | Expects to add 1-2 fleets in the Eagle Ford before year-end. |
| CPE | Expects to add one fleet in August |
| CRK | Added two fleets in early Q3 and will add one more later this quarter |
| CVX | No specifics on crews other than a statement it could add crews quickly. |
| CXO | Running four crews. We assume CXO stays at these levels. |
| DVN | Had 6 crews in April, but dropped to one crew by June. Noted plans to bring on wells in the PRB. |
| EOG | Running 5-6 fleets today. Maintenance plans calls for 10 fleets. No timing on when additions occur |
| EQT | Expects to average 2-3 fleets. We think EQT is in that range now. |
| ERF | Will complete 4 wells in North Dakota in Q4. Presumably a spot crew. |
| ESTE | 11 DUCs. Evaluating whether or not to bring back a crew. |
| FANG | Running three crews, but guidance calls for an average of 3-4 crews. Presumably 4th would be spot crew. |
| HES | No guidance. We assume one fleet given a one rig program. |
| LPI | Adding a frac crew. Not clear if working yet or to be added. We think it will be added. |
| MRO | Running two frac crews, both added in early Q3. |
| MTDR | D&C 2H’20 capex bleeds lower, thus we assume crews are released. |
| MUR | Does not appear to be running a crew, but notes it will complete DUCs at the end of the year or early 2021. |
| OAS | Noted 20 DUCs which are expected to be completed. Company had dropped all fleets, thus we assume +1 fleet |
| OVV | Will resume completions in Q3, thus at least one fleet will be added. |
| PDCE | Had two Wattenberg crews in early Q2, but dropped them. Will pick up a Wattenberg crew in Q3. |
| PE | Added two crews in July. Appears they will stay at 1-2 crews for balance of the year. |
| PVAC | Will complete 5 DUCs in Q3 after having suspended all drilling and completion activity in April. |
| PXD | Running three fleets, but had bottomed at one. Commentary seems to suggest fleet additions in 2021. |
| QEP | Will restart completions in Q4. Assume one fleet required. |
| RRC | Reduced to one frac crew from three. Front-end loaded budget. |
| SM | Running one crew with plans to add a crew in South Texas in November |
| SWN | Running one frac fleet, but could increase to two fleets (averaged 4 fleets in Q2). |
| WPX | Added two fleets in July with one to be added in August/September |
| XEC | Adding two crews in September |
| XTO/XOM | No comments on frac crews, but company noted a considerable amount of DUCs “sitting out there” |
FTSI International – Q2 Earnings Observations.
- Q2 revenue = $30M vs. $152M in Q1
- Q2 Adjusted EBITDA = ($9M) vs. $22M in Q1.
- Capex = $0.4M vs. $16.4M in Q1.
- Average active fleets = 5.0 vs. 16.0 in Q1
- Q2 utilization = 46%, thus effectively 2.3 fleets.
- Increased stages/fleet to 638 per month. Up from 492 in Q1.
- FTSI has 6 active fleets today with an expectation to average 6-7 fleets in Q3.
- Annualized EBITDA/fleet = negative $7.3M vs. positive $5.6M in Q1.
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