I was reviewing our quarterly report on well servicing when news flashed over the wire that a well had blown out in Burleson County, Texas.  Then, news that it was a Chesapeake well. Then, photos showing it to be a well servicing rig sitting over a well on a rod pump.  

The image of a well servicing rig working on a rod pump well is iconic throughout the world.  If there are 2,000 drilling rigs running around the world today, I’ll bet there are 4,000 wells on rod pump being maintained by well servicing rigs today.  

I was thinking about well servicing because Forbes Energy Services is acquiring/combining with the US well servicing division of Superior Energy Services (SPN).  It looks a bit like Jonah swallowing the whale rather than the whale swallowing Jonah:

Times are tough.  Combined, Forbes and SPN had about $1B in well servicing revenue in 2014, but then the US drilling meltdown occurred and activity for well servicing collapsed as well.  According to Spears’ estimates, these two companies have yet to see US well servicing revenues grow materially since the low point in 2016. Combined they have yet to hit $0.4B.  That said, consider these two companies:

Ranger (public) and Brigade (private) are almost back to their 2014 peaks, if our estimates are correct. 

Here’s the difference:  well servicing contractors who specialize in high capacity workover rigs performing new well completions are doing better in the marketplace than contractors with a wide range of small, medium and large rigs.  Big rigs for long laterals… that’s where our bet is placed.

Hat tip to our colleague David Hutchison for living and breathing well servicing rigs and to our other colleague, David Otte, who never quits worrying about his estimates for company quarterly product line revenues in the Oilfield Market Report.