Trey Cowan, Senior Industry Analysts, S&P Global Platts
Source: Platts Rigs and Drilling Analytical Report (RADAR), October 25, 2018
Selected Oil and Gas Support Services Firm Comments
The Permian pipeline capacity and discount on WTI [Midland] have slowed completions.
We expect to see fewer wells completed in the second half of 2018. Many E&P companies will spend their budgets for 2018 before the end of 3Q18. This higher spending was a result of higher efficiencies and higher service company prices. The net
result will be a decline in total completions in the second half of 2018. We think a rebound will happen in 1Q19, but the Permian will continue slow growth until the pipeline capacity is increased and the WTI [Midland] discount is eliminated.
Takeaway concerns in the Permian have created an overhang. However, none of our customers have indicated that they intend to reduce drilling activity.
Completions continue to lag drilling activity. There is increasing uncertainty in crude prices and increasing worry about global economic slowdown. Recovery is getting long in the tooth.
We are still lacking enough qualified drivers who are able to pass motor vehicle records checks and Department of Transportation pre-employment drug tests.
Additionally, the market is so competitive for drivers that they will jump ship for an extra 50 cents per hour.
The conclusion we draw from the survey questions and commentary by participants is that some of what we are seeing now expressed by lower prices in the broader markets was already being felt by energy executives as the third quarter was coming to a close.
This is an excerpt from Platts RADAR, October 25, 2018. To read the complete article along with unconventional drilling activity data call 800-371-0083 and request a sample copy.
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