The U.S. Oil Producers Ramp up Fracking

Analysts at Tudor, Pickering, Holt, and Co stated that the number of pressure pumping units at work in the Permian rose 5% in December over the prior month. Pressure pumping is one of the final steps needed to complete a well.

The Permian will account for the vast majority of this year’s projected increase in U.S. output of up to 900,000 barrels per day. As stated in government data, output dropped last year to approximately 11.18 million BPD on storm-related cutbacks and as demand collapsed during the epidemic.

Rising shale flows arrive as the OPEC+ have struggled in recent months to meet targets for higher production. Unrest in Kazakhstan and Libya have increased supply concerns. This sent U.S. oil prices to more than $81 per barrel, from $53 a year ago.

Pressure pumping units, also named frac spreads, use water, sand, and chemicals to break up shale rock and free trapped oil and gas. Oil companies have cut a backlog of drilled-but-uncompleted wells, and the rise in frac spreads indicates faster activity.

Global Spending on Drilling Rises

TPH analyst Taylor Zurcher wrote in a note that contrary to typical seasonal norms, the U.S. frac spread count posted healthy month-on-month improvement during December, driven almost entirely by continued strength in the Permian.

NexTier Oilfield Solutions, the third-largest pressure pumper, projected higher than projected fourth-quarter sales and earnings last week. This told investors demand was moving equipment utilization rates over 90%.

Last month, rival ProPetro Holding Corp phones were “ringing off the hook” from producers.

Bank of America (NYSE: BAC) analysts predict global spending on drilling and completion will increase 22% this week. This is the most significant year-over-year gain since 2006.