Fracking activity in the U.S. - Oct 15

[dan_s]

Comments below from TPH on 10-14-2020
As you read this, keep in mind that prior to the pandemic the U.S. had ~325 frac crews completing wells thru February, 2020. U.S. oil production peaked in November, 2019 at 12,860,000 bpd and decline each month March EVEN BEFORE THE PANDEMIC SHUT-INS.

Frac Activity Gains Train Chugs Along
Spread count climbed >20% q/q Q3’20, October likely bounds higher

Solid frac spread count increases during the third quarter likely continue as we progress into October, but November and December are less certain given seasonal patterns, upstream budget exhaustion / planned frac holidays, and the potential for weather to dent the recent momentum. September’s +16-17% m/m US active frac spread count jump comes on the heels of a 20% jump in August, which put US active frac spread count at ~125-30 near the end of September vs. ~70-75 at the trough in May. The particularly striking +70% q/q increase in the Permian basin stand out as a stat worth highlighting. September’s overall US increase put active frac spread count above April 2020 levels (~110-112); however, US frac spread count still sits at a paltry ~50% of Mar-20 levels (~245-250) and <50% vs. Feb-20 levels (280-285)…hence our lack of (irrational) exuberance. Even with a decent dose of frac hhp being scrapped, we continued to believe 2H’20 through 2021 will prove quite challenging for the pumpers (and other completions services players) as our forecasted total US frac demand of ~180-190 active frac spreads (predicated on our analysis of the number of spreads required to keep 2021 y/y exit-to-exit production flat) remains stubbornly well below marketed supply (TPHe ~350-400+). That said, frac pricing seems to’ve troughed and if we continue to see demand ramp, prices may inch higher sometime in 2021 as stacked spreads will require capital to reactivate. We do forecast a net q/q increase in frac spread count in Q4’20 given the Q3’20 exit and our Oct-20 outlook.