Investing

Superior Energy Services latest casualty of hydraulic fracturing market downturn

Fracking Layoffs

Reuters Oilfield service company Superior Energy Services Inc. on Monday said it will shutter its hydraulic fracturing unit, the second supplier this month to exit a business hammered by slower shale activity.

Last week, Basic Energy Services said it would sell most of its hydraulic fracturing equipment for between $30 million to $45 million, citing weaker activity and pricing that inhibited “the potential for positive free cash flow in the near- to medium-term.”

Oilfield service companies have been hard hit this year by weak oil and gas prices and spending cuts by producers shifting to focus on shareholder returns via cost-savings over production growth.

Hydraulic fracturing uses high-powered pumps to force sand, water and chemicals underground to release trapped oil and gas.

Consultancy Primary Vision Inc. estimates some 150 hydraulic fracturing spreads, which are used to complete oil wells, have been taken off the market since April.

Earlier this month, Superior said it was cutting 112 Pumpco jobs in West Texas. The company anticipates a $45 million pre-tax charge to earnings from a reduction in the value of its assets and will use proceeds from the divestiture to pay down debt, it said in a regulatory filing.

Pumpco had about 13 fracking spreads with roughly 650,000 hydraulic horsepower, while Basic had about 11 spreads with 500,000 hydraulic horsepower, according to Primary Vision.

“We are seeing the impact of the collapse of the Midcontinent’s drilling programs,” said Richard Spears, vice president of consultancy Spears & Associates, referring to oilfields in Kansas, Oklahoma, Louisiana and Texas. “The rest of the industry is so weak that there is no place to move frac equipment to where it could be employed.”

Oil production in the Anadarko Basin, which spans Oklahoma and parts of Texas, is expected to fall by 12,000 barrels per day this month to 551,000 bpd, according to the U.S. Energy Information Administration. The Eagle Ford shale in South Texas is also expected to suffer a production decline, according to the EIA’s latest Drilling Productivity Report.

Earlier this month, top fracking provider Halliburton Co closed its Oklahoma office and laid off hundreds of workers.

Spears said many fracking companies have been hurt by oil companies buying sand and chemicals directly from suppliers rather than from oilfield service firms.

“Taking those away from the frac service company evaporated the profits that allowed the service companies to reinvest in growth or survive a sustained downturn,” he said.

Comments

The crossroads of energy information for minerals owners in Oklahoma. Where you can: See recent prices of mineral and lease transactions. Receive an offer to lease or buy your minerals.

Find relevant news stories on the most active areas, including the Scoop and Stack Plays.

Data Powered by Oseberg

Today’s E&P world is rapidly shifting towards data-driven decision making, but those decisions are only as good as the data behind them. Access Oseberg's deep, accurate, and detailed pool of insight-rich industry data with our powerful analytical and search tools and get the clearest picture of what's happening as soon as it happens.

Disclaimer

This web site is maintained solely for the personal use of our visitors. Although we at Oklahoma Minerals have made all reasonable efforts to provide accurate information, we cannot guarantee the completeness, timeliness or accuracy of the information contained herein. Nothing in this web site contains investment advice. Any decisions based upon the information contained in this web site are the sole responsibility of the user.

Copyright © 2020 OklahomaMinerals.com

To Top
US Natgas Futures Soar in Best Week Since 2009Full Story