E Bakken Update: Newer Well Designs Are Frac Sand Intensive And Good For The Producers

(Source: Continental)

Areas like the SCOOP/STACK and Permian may be seeing the greatest increases, as this style seems meant for this type of play. All plays are seeing increases, but some more as one would expect. Matador (MTDR) adopted its initial well design working with EOG in the Eagle Ford. It has used this approach in Delaware Basin wells. 

(Source: Matador)

Its new design uses 2100 to 3000 lbs/ft. This means a 10,000 foot lateral would require 30,000,000 lbs of proppant. This design continues to expand and is a perfect fit in the Permian.

(Source: Matador)

Matador’s Wolfcamp A-XY locations have also responded well to Mega-Fracs. The decline rate long term has outperformed most company curves.  These wells perform even better long term than in the short term which is irregular. This has much to do with US oil production holding up better in the long term. This has been bad for the glut, but an improvement with respect to EURs and well economics in Texas.

(Source: Devon)

Devon (DVN) is also moving ahead with enhanced completions. It is using around 2,000 lbs/ft and this has helped it to industry leading results. It recently completed the Hobson row in the Woodford core which used 2, 600 lbs/ft. It is using 70 stage horizontals with frac clusters spread out every 20 feet. 

(Source: Devon)

Frac sand continues to take market share.  This is important as overall proppant usage has decreased with the downturn.  Much of this is due to less wells completed per year, but this increased volumes are making up for this.

(Source: Hi Crush)

Hi Crush (HCLP) has shown frac sand market share to have increased 71% since 2009. Ceramics and resin coated sand have not faired as well.  Mega-Fracs are sand intensive and benefit those producers. 

In summary, the frac sand market continues to have upside based on the new Mega-Frac designs. Most operators are moving to just these types of designs, and it is possible be would see significant improvements in the years to come. We need to keep in mind that this is a newer industry. It will continue to grow production per foot while decreasing costs. It is possible well service will be able to raise prices next year, but things look good going into year end. The benefactors include US Silica (SLCA), Hi Crush, Fairmount (FMSA) and Emerge (EMES). It could be counter productive for Carbo Ceramics (CRR) as its need is decreased. Although there has been an incredible move in the sector, there should be more to come.

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Michael Filloon 3 years ago Author's comment

Thanks Craig,

I appreciate your input in any form. Have a great weekend buddy!