It is fairly easy to discover that Schlumberger is the largest directional drilling service company in the world (32%) and that Halliburton (17%) and Baker Hughes (13%) are number 2 and number 3. But who are the top companies in the so-called US Shale plays, where 16-17,000 horizontal laterals will be drilled this year? SLB, HAL and BHGE all earned their global market shares by deploying big rotary steerable systems offshore and internationally, but rotary steerable is not dominant domestically. At home, the good old mud motor/measurement while drilling combination still rules the day on land.
Measuring the market shares of the domestic directional companies is a challenge we’ve wrestled with for the last several years. Here’s how we do it:
First, we sample all wells drilled in each basin across the country. We do this through our data mining partner, Oilfield Logix. OFL’s team pulls every well file in every state and reviews the form filed with the state that plots the directional record. Not every record can be used because, well, people aren’t perfect, and sometimes they write down nonsense on the paper they file with the state. Nonetheless, this process allows a big enough sample to be gathered to show which directional companies each oil company tends to use in each basin, as well as how many feet of hole each directional company tends to drill in each well.
Then we make a huge assumption: That an oil company will tend to keep a directional company on a rig month after month after month. In other words, the oil company won’t fire the directional company. We have to make that assumption because well records are not available to the researcher until 90-250 days after a well is drilled.
There are several good sources for current drilling activity by oil company. We have our favorite, but the market has choices now. We look at the current drilling of each oil company, map that drilling activity to each oil company’s favorite directional driller and their productivity from 6 months ago and – voila! – out comes directional footage by directional service company by basin and by operator.
Below are the current market shares for the 9 busiest US directional companies:
US Directional Driller Market Share
Not only is Schlumberger the world’s leader, they are also the leader on land in the US. But the US land market is the domain of the independent directional company. While SLB, HAL and BHI are all in the top 9, they represent (combined) 24% of the US market compared with 62% of the global market.
Lots of good directional companies are shown here, but we’re going to bet on MS Energy Services, which was recently acquired by Patterson Energy Services (PTEN). MS is on 50-60 rigs right now, most of which are not Patterson rigs. If Patterson is able to convince 25% of their drilling rig customers to consider using MS, then the MS share could rise from 10% to 20%, displacing several directional companies. This is not a given and will, in reality, be quite a challenge for PTEN, but that’s our bet for 2018.