US oilfield activity soars despite frac sand delivery delays

Published: Thursday, 17 May 2018

Revenues rise in Q1 on increased domestic oilfield activity and modest growth in other regions.

The increase in fracking activity in the United States is driving increased domestic demand in the country for frac sand.

Oilfield activity has seen more modest increases globally, meaning that global demand for other oilfield minerals such as barytes and bentonite has been less marked. But barytes prices are ticking upward, with supplies from China restricted by the East Asian country’s tighter environmental regulations and light inventories.

Industrial Minerals assessed the price of barytes, unground lump, API, bulk, SG 4.2, fob China, at $90-100 per tonne on March 29, up from $80-90 per tonne on February 22 and the first rise in the price in 2018. It has since fallen back slightly, to $89-100 per tonne on April 26.

Revenues up despite delivery disruption

Halliburton, a key provider of fracking services, reported a 34% year-on-year increase in revenue for the first quarter of 2018 at $5.7 billion, with activity in the US shale sector increasing the most.

Revenues in North America were up by 58% year-on-year in the first quarter, benefiting from increased activity due to rising oil prices, despite some logistics problems for the fracking industry. Delays in rail activity after very cold weather around the US states of Minnesota and Wisconsin affected sand deliveries in the country.

The rail delays were exacerbated by flooding on the Mississippi River, which delayed some barge shipments in the first quarter.

The increase in revenues for Halliburton followed similar results from other major oilfield service companies.

Schlumberger’s first-quarter revenues were up by 14% from last year at $7.83 billion, while revenues in North America were up by 52% from last year at $2.84 billion.

"Despite industry-wide sand rail delivery disruptions, we successfully ensured sufficient sand supply, strong service quality and overall business continuity across our customer base," Schlumberger chairman and chief executive officer Paal Kibsgaard said.

Meanwhile, General Electric-owned Baker Hughes’ first-quarter revenues rose by 1% in the first quarter to $5.4 billion.

Speaking to investors, Baker Hughes chief financial officer Brian Worrel noted increased activity in the onshore fracking sector despite the supply-chain challenges.

"In oilfield services, market conditions continue to improve. In the first quarter [there was a] 5% sequential increase in US land rigs [but] the US offshore market was down by 21% quarter-on-quarter," he said. "Given the [oil] price backdrop, we expect North America completion to start to pick up in [the second] quarter."