By Sarah Groen, VP Strategic Marketing
Though still awaiting Q2 earnings from the energy industry, it seems as if there is still more good news in store for overall industry growth. According to Barclay’s updated industry spend report, E&P spending growth is set to be higher than previously thought. Worldwide, E&P spend is expected to reach $712 billion in 2014. Here at home, even more rapid growth is expected. E&P spending in the US is expected to rise 9.6% year over year.
However, despite these predictions, the E&P companies have thus far exhibited a great deal of capital discipline. Therefore, either the budgets will go unspent, or we are in for a rapid increase in spend in the second half of 2014.
In terms of focus, it still appears that the Permian will remain a hot area of focus over at least the next 18 months. Horizontal rig count in the Permian has increased 25% year over year. As this region continues to grow, it should be a big positive for service companies in the area as well. Pricing for pressure pumping appears to be on the rise and some service companies have indicated the possibility of bringing more capacity online.
Although the overall market is in a growth phase, it’s important to recognize that horizontal well increases are making up the bulk of the growth. Horizontal wells now represent 61% of the wells frac’d in the US. We’re also seeing continued trends towards in favor of oil over natural gas, and towards the development phase of completions rather than exploratory phase. This last trend supports the continued focus on developing assets efficiently without sacrificing gains in productivity. Long term hydraulic frac monitoring solutions and insights into the results of each and every frac help to maintain that productivity in a cost effective manner.