Original title: hydraulic fracturing company sees light at the end of the tunnel in the oil market

Sinopec News reported on August 25, 2021, the continuous recovery of global oil demand and drilling activity makes oil field service companies optimistic about the short-term and medium-term prospects of the industry.

Oil field service providers recently reported second-quarter earnings that exceeded analysts' expectations. But more importantly, companies that specialise in areas ranging from hydraulic fracturing to offshore drilling say that despite the recent surge in the number of cases of Delta mutant infections, the oil services industry will face a solid and reliable recovery in the coming quarters or even years.

The market also seems to believe that the recovery in global oil demand will boost drilling activity. Shares of oil field services companies have rebounded over the past year, driven by rising oil prices and demand.

The share price of Schlumberger has risen 46.5% in the past 12 months, Helmerich and Payne Materials have risen 54% in the past year, and Halliburton has risen 24%. The share price of Baker Hughes is up 42%, and that of Transocean is up 159% since August 2020.

The increase in the number of drilling rigs and crude oil production in the United States also supports the view that the recovery is under way.

As of August 20, the total number of rigs in use in the United States was 503, an increase of 249 over the same period last year, the highest since April 2020, but still down sharply from 790 in March 2020. The U.S. Energy Information Administration (EIA) estimates that U.S. crude oil production rose by 100000 barrels a day for the third consecutive week, to an average of 11.4 million barrels per day.

In addition, according to an analysis conducted by the US Commission on Energy, Labor and Technology in early August based on preliminary data from the Bureau of Labor Statistics (BLS), the oil field service industry is now showing job growth for the fifth month in a row and is expected to add 6082 jobs in July. The committee estimates that about 38300 jobs have been restored in the oil field service sector, after the number of unemployed as a result of the epidemic peaked at more than 115000.

Executives at oilfield services companies have said in recent weeks that they expect oil activity and business to continue to recover, possibly for years.

The world's three largest oil field service providers expect a vaccine-driven recovery in global oil demand into the coming quarters, which will lead to the next cycle of rising demand for oil drilling and completion.

Jeff Miller, chairman, president and chief executive of Halliburton, said in his second-quarter results released in July: "the momentum of positive activity we are currently seeing in North American and international markets, coupled with our expectations for future customer demand, convince us that this will be an upward cycle that will last for many years."

"while we recognize the risks posed by COVID-19 mutants, we expect spending and activity levels to gain momentum this year as the macro environment improves, possibly creating conditions for stronger growth in the industry in 2022," said Lorenzo Simonelli, chairman and chief executive of Baker Hughes.

Olivier Le Peuch, CEO of Schlumberger, said on the company's second quarter earnings conference call: "due to high oil prices, the supply response to this demand recovery is developing widely as expected. In fact, this combination has led to an increase in short-cycle production and an increase in long-term projects, as reflected in new final investment decisions in the second quarter and a recovery in encouraging offshore development and near-field exploration. "

"assuming oil prices remain stable and close to current levels, we will not be surprised to see further increases in drilling activity in the budgets of listed companies next year," Helmerich and John Lindsay, chief executive of Payne Materials, said at the end of July. "

According to Helmerich and Payne Materials, the Permian basin will continue to lead the increase in the number of drilling rigs in use.

ProPetro Holdings, based in Midland, Texas, which provides pressure pumps for fracturing operations in North America, said in early August, "the pressure pump industry is facing an upcoming reinvestment cycle, which will require innovative solutions to meet the needs of the market."

Philip Gobb, chairman and chief executive of ProPetro Holdings, said: "volatility will remain as we deal with COVID-19 and other potential changes, but oil price fundamentals appear strong and there is hope for a sustained recovery."

He added: "the timing is still uncertain because we are still in the early stages of years of recovery."

Executives at oil field services companies say recovery outside the United States is also under way and will accelerate in the coming months.

"with the support of ongoing dialogue with our customers, we believe we are at the beginning of a sustainable recovery in offshore drilling activity. Assuming oil prices remain optimistic, we believe we will see a further strong recovery in the offshore drilling market in 2022 and beyond. "

Compiled by Li Jun from the oil price net

The original text is as follows:

Frackers See Light At The End Of The Tunnel In Oil Markets

Recovering global oil demand and drilling activity has made oilfield services firms optimistic about the sector's prospects not only in the immediate future but also in the medium term.

Oilfield service providers reported second-quarter earnings that beat analyst forecasts. But more importantly, companies specializing in different segments-from fracking to offshore drilling-expressed confidence that the oil services industry now faces a solid recovery in the coming quarters and even years, despite the recent Delta variant surge.

The market also seems to believe that recovering global oil demand will boost drilling activity. Shares of oilfield services firms have rallied over the past year, driven by rising oil prices and demand.

Schlumberger (NYSE: SLB) is up 46.5 percent in the past 12 months, Helmerich & Payne (NYSE: HP) is up 54 percent, Halliburton (NYSE: HAL) stock has gained 24 percent, Baker Hughes (NYSE: BKR) has seen shares rise by 42 percent over the past year, and Transocean (NYSE: RIG) has surged by 159 percent since August 2020.

The rising U.S. rig count and the increase in American crude oil production also support the view that a recovery is underway.

As of August 20, the total rig count in the U.S. was 503 active rigs, up by 249 from the same time last year—the highest rig count since April 2020, but still down sharply from the 790 active rigs in March 2020. The EIA’s estimate for U.S. crude oil production for the week ending August 13 rose by 100,000 bpd for the third week in a row to an average of 11.4 million bpd.

Moreover, the oilfield services sector has now seen a fifth consecutive month of job growth, adding an estimated 6,082 jobs in July, the Energy Workforce & Technology Council said earlier this month in an analysis based on preliminary data from the Bureau of Labor Statistics (BLS). The sector has restored around 38,300 positions from a peak of over 115,000 pandemic-related job losses, the council estimates.

Executives at oilfield services firms said in recent weeks that they expect a lasting, possibly a multi-year, recovery in activity and in their business.

The world’s three largest oilfield services providers expect the vaccine-driven recovery in global oil demand to continue through the coming quarters, which they expect will lead to the next upcycle in demand for oil drilling and completions.

“The positive activity momentum we see in North America and international markets today, combined with our expectations for future customer demand, gives us conviction for an unfolding multi-year upcycle,” Jeff Miller, Halliburton’s chairman, president, and CEO, said last month in the Q2 results release.

“Although we recognize the risks presented by the variant strains of the COVID-19 virus, we expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022,” Baker Hughes chairman and CEO Lorenzo Simonelli said.

“With oil price at elevated levels, the supply response to this demand recovery is developing broadly as anticipated. Indeed, this combination has resulted in a call on short-cycle production as well as an uptick in long-cycle project, reflected in new FIDs and encouraging recovery in both offshore developments and near-field exploration activity through the second quarter,” Schlumberger CEO Olivier Le Peuch said on the Q2 earnings call.

Helmerich & Payne CEO John Lindsay said at the end of July, “Assuming oil prices remain stable and near current levels, we would not be surprised to see 2022 budgets for public companies drive further incremental increases in rig activity next year.”

The Permian will continue to lead the way in active rig gains, Helmerich & Payne says.

Midland, Texas-based ProPetro Holding, which provides pressure pumping for fracking in North America, said in early August that “the pressure pumping industry is faced with an impending reinvestment cycle that will require innovative solutions to meet the needs of the market.”

“As we navigate the COVID-19 delta and potentially other variants, volatility will remain, but oil price fundamentals appear strong for a continued recovery,” ProPetro chairman CEO Phillip Gobe said.

“Timing remains uncertain as we’re still in the early innings of what we view as a multiyear recovery,” he added.

Outside the United States, recovery is also underway and will accelerate in the coming months, executives say.

“Supported by the ongoing conversations with our customers, we believe we are at the beginning of a sustainable recovery for offshore drilling. Assuming oil prices remain constructive, we believe we will witness a robust offshore market recovery in 2022 and beyond,” Transocean’s CEO Jeremy Thigpen said on the Q2 earnings call earlier this month.