Spears & Associates has been providing the oil industry’s drilling forecast since 1982.  That first year we issued a single forecast, but soon we moved to quarterly updates. A handful of times – Q3 2001, for example – we revised our forecast a week after it was published.  Same in Q4 2008 when the global economy collapsed.

In March 2020 we wake up each morning, check the price of oil, and revise everything – rigs, spending, footage, markets, product lines…  This is the classic “catch a falling knife” scenario.  

Consider the following:  Hydraulic fracturing.

On Tuesday this week we issued this global frac market estimate:

Two days later we issued this frac market estimate:

Those pretty lines wipe $3 billion out of the annual frac market based on a new lower outlook for oil prices.

But here’s what REALLY catches my attention:  4 quarters ago, Halliburton, by itself, had quarterly frac sales of $2 billion.  Today the GLOBAL frac market is SMALLER than that.

News from the field this week suggests US frac activity is falling at least 50% right now, perhaps more.  And THAT canary in the coal mine suggests drilling rig activity will collapse hard as soon as current pads reach TD on the last well.