Home Energy services U.S. oil companies eye higher prices amid tight services and equipment market

U.S. oil companies eye higher prices amid tight services and equipment market

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April 28 (Reuters) – U.S. oil service companies said on Thursday they were poised for some of the highest prices in years as a push to boost activity came up against the constraints of the supply chain and the focus within the industry on maintaining capital discipline.

U.S. oil futures hit multi-year highs and were trading near $105 a barrel on Thursday. The surge in prices supported an increase in demand for oilfield services and equipment, with the number of U.S. rigs climbing to 695 in the week to April 22 from 438 a year ago, according to Baker Hughes.

Oil company Patterson-UTI Energy (PTEN.O) said it was seeing significant price increases for drilling and fracking.

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“I can’t remember another time when peak daily rates for rigs have risen so rapidly,” chief executive Andy Hendricks told investors on an earnings call, noting that the prices are expected to reach their highest level in a decade.

Hendricks warned that if oil producers don’t already have deals in place for high-quality rigs or hydraulic fracturing fleets, they might not be able to get one easily at the moment. ‘coming.

Rival contract driller Helmerich & Payne said it subcontracts rigs around $30,000 a day.

“The economics of our spot contracts are improving at a rapid pace, and we expect similar improvements for our futures contracts as they are rolled over or enter the spot market in the coming quarters” , Helmerich & Payne CEO John Lindsay said on a conference call.

Helmerich & Payne ended the last quarter with 171 platforms, an increase of 10%. Patterson-UTI increased its average rig count from nine in the first quarter to 115 rigs, and expects an average of 122 rigs in the current quarter.

Hendricks said Patterson-UTI was unwilling to build new rigs to address equipment shortages, echoing sentiments from service sector rivals who fear oversupplying the market and driving down prices. price.

Supply chain issues are also hampering the ability to accelerate. For some products such as drill pipe, lead times are around a year, Hendricks said.

“We have no chance of oversupplying the market on the fracking side due to supply chain issues,” Robert Drummond, CEO of pressure pumping firm NexTier Oilfield Solutions (NEX) told investors. .NOT).

NexTier said this week that the hydraulic fracturing market is nearing full utilization. It expects sequential revenue growth of more than 20% and “a significant increase in adjusted EBITDA margin,” the company said in a statement.

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Reporting by Liz Hampton in Denver Editing by Chris Reese and Paul Simao

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