PacWest Unconventional Market Update Call, December 2014

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PacWest Unconventional Market Update, December 2014

PacWest Consulting Partners, an IHS company, hosted an open conference call on December 11th to address current market conditions.

You can download the playback/audio from the call here: Conference Call Audio and presentation
PacWest Unconventional Market Update, Dec 2014

For questions or information on our market intelligence, please contact Jennifer Thomas, jthomas@pacwestcp.com, 713.929.3285

Frac Market Prepares for the Downturn

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We will host a conference call on Thursday, December 11, 2014 at 9:30 am CST to discuss the market outlook from our latest WellIQ and PumpingIQ reports.

In addition to the forecasts contained in these latest, leading reports on drilling and completion activity and hydraulic fracturing — published October 24 and November 14 of this year, respectively – we’ll present a revised set of downside forecasts that reflect changes in the market since Thanksgiving.

The North American market for hydraulic fracturing services is preparing for a downturn in 2015 due to rapidly falling oil prices. Service providers and equipment manufacturers report that the market and their customers have not yet changed, but all expect changes in the immediate future and are developing plans to deal with the downturn.

In our revised downside scenario, we expect a 12 percent decrease in the number of horizontal wells frac’ed in the US Land market in 2015 and an 8 percent decrease in frac demand for 2015. These figures represent a significant downgrade from the base case scenario forecasts published in the recent WellIQ and PumpingIQ reports – a 6 percent increase in the number of horizontal wells frac’ed and an 8 percent increase in frac demand for 2015.

Despite the imminent downturn, equipment delivery books still appear strong for 2015, particularly for the first half of the year. In our base case scenario, we expect 1.4MM horsepower (net capacity additions) to be delivered into the US Land market in 2015, representing an 8 percent increase in hydraulic fracturing capacity from the previous year. However, in the revised downside scenario, we expect only a moderate reduction in net capacity additions, from 1.4MM to 1.1MM horsepower. In this scenario, we expect some H1 2015 orders to be delayed to H2 2015 and 2016 and some orders to be cancelled.

Falling frac demand and increasing frac capacity will quickly lead to falling capacity utilization in 2015. This will create challenging market conditions for many service providers and equipment manufacturers.

“The frac industry is preparing for a tough 2015,” said Ryan Carbrey, project lead. “Many service providers have just begun to see improvements in pricing and margins. This downturn will drive a focus on improving efficiencies and cost containment. Additional industry consolidation is also expected.”

We will hold a conference call on Thursday December 11, 2014 at 9:30am CST to discuss our outlook for the market. Call details are provided below. The call is open to the public.

Conference Call:
Dial-in: +1 (800) 830 3581
International Dial-in: (262) 320 4698
Passcode: 2922791

Presentation Link:

https://join.me/PacWest_Market_Update

For more information, contact Jennifer Thomas, 713.929.3285, jthomas@pacwestcp.com.

IHS Acquires PacWest Consulting Partners

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It is our sincere pleasure to announce that PacWest Consulting Partners has been acquired by IHS Inc. (NYSE: IHS – www.ihs.com). IHS is a leading global provider of business information, insight, and analytics for a wide range of capital-intensive sectors including the energy industry.

Both the PacWest and IHS teams are extremely excited about the positive impact that this acquisition will have on the value that we deliver to you and your organization.  You can find the full text of the official news release here.

First and foremost, we want to assure you that delivery of your current PacWest products and services will continue uninterrupted and your account contact will remain the same. You can expect the same level of insight and service that you have become accustomed to receiving from PacWest.

Over the past four years, the PacWest team has built the leading suite of market intelligence products covering global unconventional oilfield services and equipment markets, as well as the leading strategy consultancy serving the global oilfield services and equipment value chain. We are proud of what we have accomplished and expect that as part of IHS we will be able to develop new, market-leading products that offer unparalleled market insights covering emerging and underserved topics.

As you may know, IHS offers a broad array of energy-related data, research, consulting, and advisory services.  IHS has been delivering critical data, insights, and consulting services to its customers for more than 50 years and became a publicly traded company on the New York Stock Exchange in 2005. The company is headquartered in Englewood, Colorado, USA, and employs more than 8,000 people in more than 30 countries around the world.  We are excited about combining the talents, vision, analytical tools, and data of IHS and PacWest to enhance and expand our suite of products and services.

We will continue to support all existing products and platforms from PacWest while actively exploring opportunities to enhance and expand the range of products that we provide to our customers.  This new alignment will strengthen our ability to provide you with even better, actionable insights.

We would like to personally thank you for your business and support to-date. Please continue to interact with your existing PacWest contacts as we proceed through our transition. We are excited about the opportunity to continue serving your needs.

 

Proppant Pricing Survey

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PacWest Consulting is sponsoring a pricing survey for market research; It is intended for proppant buyers and sellers.

Frac Sand Survey. To fill it out, visit: https://www.surveymonkey.com/s/BB2N3S6

Ceramics Survey. To fill it out, visit: https://www.surveymonkey.com/s/RPLFGPZ

The results of the surveys will be used in aggregate

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and individual responses will not be analyzed or stored.

PacWest Water Forecasts in West Texas

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Shale Plays Media shares an article on the projections for water used by the oil and gas industry in the Permian Basin. It continues to increase through 2014, and the trend is expected to continue.

PacWest Consulting Partners in Houston just last month estimated the oil industry would use 540 million barrels of water in 2014 — almost all of it, for hydraulic fracturing. It reflected a stark upward revision by the firm, one of the few that tracks industry water usage by region. In February, the PacWest anticipated 375 million barrels would be used through the end of the year.

That level of demand means more and more oil companies will seek alternative water strategies and more water-sourcing companies will seek to provide them, said Chris Robart, a partner with PacWest.

“It’ll continue to mature in the Permian Basin,” Robart said. “There is a lot of consolidation that is happening right now across all the service companies and pure-plays, as far as water transfer or water storage, who

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want to go to market with a competitive service around water.”

full article at http://eaglefordtexas.com/news/id/137603/oil-show-west-texas-welcomes-water-wildcatters/

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