Richard & John Spears answer your questions and discuss the oilfield services business. The Spears brothers have a combined 75+ years as leading industry experts and are prized speakers for events all across the globe. The Drilldown will visit all topics in the oilfield services and equipment and discuss industry current events.
New episode every Monday. Got a question? Send it to firstname.lastname@example.org
Aztec Gold, Virginia Tobacco, and West Texas Intermediate
Richard and John describe how the price impact of US shale oil production is similar to the discovery of Aztec gold and the development of the colonial tobacco industry. The guys also show how shale oil is currently saving consumers $80/bbl.
Bjørn Free, Die(vest) Hard
In this podcast, Richard and John discuss the implications of the recent decision by Norway’s sovereign wealth fund to sell its holdings in oil and gas exploration companies.
Consolidating the Oilfield: Part 2
In this podcast, Richard and John discuss institutional investor actions that could support the creation of new, large scale ($10 billion market cap) oil service companies and identify three types of diversified enterprises that might emerge.
Consolidating the Oilfield: Part 1
Although North American activity has increased 250% in the three years since the bottom of the oil price cycle, oil service firms have yet to see their profit margins recover to “normal” levels. Richard and John discuss the advantages of consolidation and the potential emergence of new “segment champions”.
Secrets to Successful Collaborations
Development and commercialization of innovative oilfield technology can require the close collaboration of an entrepreneur, a service firm, and an operator. In this episode, Richard and John identify six questions which successful collaborations must address.
The Centennial Edition
In celebration of the 100th episode of the Drilldown, Richard and John review the genesis of the show and listenership trends, and discuss what’s next for the series and the company.
In this episode Richard and John share their tried and true 10 “rules of thumb” for tracking and estimating drilling and completion markets.
All Models are Wrong; Some Are Useful
Knowing that an accurate forecast can be an important part of a good decision, we’re always interested in how to improve models by reducing uncertainty and bias. In this episode, John and Richard discuss sources of common modeling errors, such as recency bias, availability bias, and anchoring.
The Day the Oilfield Changed
The Day the Oilfield Changed is a series reviewing technical breakthroughs or commercial developments which have fundamentally altered the nature of the upstream petroleum industry. In this episode we discuss the beginnings of hydraulic fracturing and its relationship to the US strategic helium reserve.
Nostradamus (The 2019 Edition)
Richard and John start the new year with predictions for 2019 regarding oil price volatility, the December 2020 futures price, the likelihood of a takeover of WFT by its bondholders, whether frac sand consumption per well will continue to increase, and the outlook for the subsea tree market. And, they review the EIA’s forecast of 2019 US crude oil production.
Reviewing Our Predictions
A major question to any intelligence firm is how accurate its market predictions are. In this podcast Richard and John review their year-ago predictions for oil prices, frac sand demand, horizontal lateral length, “big data” M&A, and subsea equipment market size.
The (Oilfield) Word of the Year
Richard and John debate, discuss, and vote on their candidates for the most important word or expression in the oilfield in 2018.
The government of Alberta recently mandated production cuts in an attempt to reduce inventories and lift oil prices. Will this be enough to help Canada’s struggling oil sector?
10 Things to be on High Alert for in 2019
Richard and John pose ten questions facing operators and oil service firms in 2019 and discuss how their response will create winners and losers and influence drilling, completion and production activity.
Oilpatch Strategies in 2019
What strategies will operators and oil service companies pursue in a low oil price environment? How will operators control costs and where will service firms look for growth? John and Richard discuss these questions and more.
What Drives Oil Demand?
Which has more of an impact on oil demand: price or population? Does the evidence suggest that the recent drop in oil prices will impact oil demand?
Stump the Spears
John and Richard are back with questions to test each other’s knowledge of the oilpatch. Let the lightning round begin!
John and Richard discuss the challenges faced by small and medium-sized operators in monitoring and anticipating price and availability trends in the oil service sector, and how this can impact their cost of operation.
Colorado’s Proposition 112
Richard and John evaluate the possible impact of Proposition 112 on Colorado’s oil and gas industry if it is approved on November 6th.
Outlook for Offshore Markets
E&P activity outside North America has slowly begun to recover. In this podcast Richard and John identify five offshore-related markets that are expected to grow in 2019. Plus, the Lightning Round makes a return!
Three Commercial Terms Expected to Change
In this podcast Richard and John identify three areas – two in drilling, one in completion — where they expect a change in how oil services are charged.
The Three Factors of Frac Efficiency
While frac job size (measured in pounds of sand per well) has skyrocketed in recent years, frac efficiency (measured in stages per day) has held steady. In this podcast Richard and John discuss the outlook for frac efficiency and three factors that can have an impact on improving it.
The Next Bottleneck
The story in the US oilpatch this year has been the shortage of pipeline capacity in the Permian Basin, which has caused oil prices in Midland to fall and completion activity in the Permian to slow. In this podcast Richard and John discuss the next oilpatch bottleneck and when it’s coming.
What We’re Listening For From US Operators
Although oil prices have been fairly steady this year as US oil output has ramped higher, could US operators increase production too much and cause prices to fall next year? In this podcast Richard and John discuss what level of US oil production growth might trigger a price drop.
Dealing (and Investing) With Uncertainty
In this podcast Richard and John identify some of the oilfield markets for which little or no operational and/or economic information is publicly available.
The Dollar's Imapct on Oil Demand
In this podcast Richard and John discuss why the US dollar has risen against other currencies this year and the risk this poses to global oil demand growth.
Transformers (the Oilfield Version)
“Which companies are doing the best job of transforming themselves into providers of shale-related services?” In this podcast Richard and John discuss what shale transformation looks like for an oil service firm and whether customers or investors are driving this process.
Episode 11 (Rerun)
A bbl of monkeys!
This week, we're re-surfacing one of our favorite early episodes: Topics include: New vs old wells, Drilling Fluids Profitability, "Pressure Pumping" vs "Fracking", Rotary Steerable Directional Drilling, "TD", and more! Also, John gives a fascinating & unexpected answer to where the abbreviation "bbls" comes from - it's not what you'd expect!
Is “Fractivity” At Risk Outside the Permian?
In this podcast Richard and John discuss when other regions are likely to experience pipeline takeaway constraints similar to the one currently impacting completion activity in the Permian Basin.
Winners and Losers in the Frac Market
In this podcast Richard and John compare how well nine frac companies have performed in terms of market share since 2017.
Questions From The Field
In this podcast Richard and John respond to questions regarding expectations for drilling and completion activity, pump truck newbuilds, and frac pricing. Will other shale plays see a slowdown in activity because of problems with Permian takeaway capacity? What is “e-frac” and where will it be used?
Three Emerging Trends
In this podcast John and Richard discuss three changes likely to emerge as the oil service industry supply chain is re-imagined by the push to lower the cost of drilling and completing wells.
As the US oil industry moves toward a “factory” drilling approach and looks to optimize efficiency, operators and service firms are challenged with how best to measure performance. MTBF (mean time between failure) or MTTF (mean time to failure)
A Day In The Life Of A Cementing Crew
In this podcast, Richard and John describe one of the most critical jobs on the wellsite -- how a crew goes about cementing an oilwell. How many people are involved? What equipment is used? And, how long the job takes?
Will Everything Old Be New Again?
Oilfield equipment and service markets closely associated with well maintenance (well servicing, coiled tubing services, and artificial lift) have lagged during the current upturn. In this podcast, Richard and John discuss the outlook for brownfield investment in a world with low-geological risk shale development opportunities.
Our Forecasts for 2018: A Mid-Year Review
In this podcast Richard and John review how well the five predictions they made back in January for 2018 (Episode #46) are holding up. Who’s in the lead for brotherly bragging rights?
Big (and Bad) Data
In recent years the upstream sector has widely embraced data analytics and automation as the key to process optimization and cost control for drilling, completion, and production operations. In this podcast we discuss how poor quality data is slowing this process and could undercut the value of analytics and automation.
Risks to the Permian Basin
In this episode we discuss takeaway capacity constraints that are emerging in the Permian Basin and evaluate the potential impact on drilling and completion activity and oil production over the next 18 months in that market.
10 Key Questions For An Acquisition
In this episode we identify 10 questions – six regarding personnel/management, 4 involving markets - that should be asked by investors when evaluating a potential acquisition.
Oilfield Spending in 2018: An Update
With spot WTI prices approaching $70, US drilling activity is increasing faster than expected. In this podcast we discuss what this means for spending on oilfield equipment and services this year.
Infinity War and Oilfield Investment
What factors influence an operator’s decision to explore versus exploit? How are movie sequels like developing shale resources? In this podcast we highlight some of the parallels between Hollywood and the oilpatch.
Natural Gas Prices
A colder-than-normal spring has pulled natural gas inventories well-below average for this time of year. Does this mean gas prices might surprise to the upside in 2018? In this podcast we discuss how expectations for gas production have held down gas prices to-date even though inventories are low.
Breakeven, Oil Price, and Capital Spending
One question we’ve been asked is: “If breakeven prices average ~$40/bbl and oil prices are $65/bbl doesn’t this imply tremendous profitability for the industry and mean that upstream investment should grow enormously?” In this podcast we discuss the importance of breakeven price in an operator’s investment decision.
The Day the Oilfield Changed
In this episode we discuss the development of offshore drilling and development, offshore production as a percent of global oil output, cannons, and offshore territorial limits.
Production testing services is a little-followed segment of the oilfield services industry. In this podcast we discuss the reasons for conducting production tests, the different types of production testing services, and the factors that drive this market.
What’s Ahead for the Directional Drilling Services Market?
Over the past decade directional drilling services have moved from primarily being a non-US, offshore-oriented market to one that is predominately focused on the US onshore. In this podcast we discuss the use of conventional systems versus rotary-steerable technology, as well as developments in signal transmission technology.
Saudi, Russia Long-Term Alliance
Saudi Arabia recently disclosed that it is in discussions with Russia about replacing their short-term production agreement with a long-term alliance so as to stabilize the oil market. In this episode we discuss what this implies about their assessment of future shale oil production growth both in the US and abroad, and operators’ capital discipline.
What I Learned Last Week in the Permian Basin
In this episode we discuss Richard’s observations from his recent trip to West Texas, including: The rate and extent to which the Permian market has switched to box-type sand deliver; Personnel turnover and how far workers are commuting to their jobs in the Permian; and Will drilling practices lead to production problems?
A Whole Lotta Shakin’ Goin’ On, or, what Michael Bennett and a Frac Pump have in common
You’ve probably heard it; you might have wondered it: in this episode we answer the question, “Why doesn’t fracking cause earthquakes?”
The Day the Oilfield Changed
In this episode we discuss how a 1970 agreement between Occidental Petroleum, led by Dr. Armand Hammer, and the government of Libya, led by Muammar Gaddafi, set OPEC on course to become a force in the world oil market.
US Shale Well Productivity
US shale well initial productivity (IP) more than doubled from the start of 2014 through the end of 2016, but has fallen about 10% over the past year. In this podcast, John and Richard discuss the factors that increased IP from 2014 to 2016 but which caused IP to decline in 2017.
Questions from the Field
In this episode, all things drill bits. We answer questions we’re hearing from the field including: What are the different types of drill bits and when do you use them? Are drill bits rented or sold? What is the share of the bit market in terms of revenues? We’ll also dive into Spindletop and and the origin of the Sharp-Hughes Tool Company.
Where Are We In the Market Cycle?
Although some oilfield product/service markets have risen for 21 months in conjunction with the current upturn in US drilling activity, other segments have only recently begun to show signs of recovery. In this episode we compare and contrast the rates of recovery for drilling, completion, production, offshore, and equipment market segments.
Back to the Future?
Improvements in rig efficiency when drilling horizontal wells have saved money for operators but have also lowered drilling contractors’ revenue under traditional day-rate contracts. Richard and John discuss how rig owners are now looking at performance-based revenue models as a way to be paid more.
The Day the Oilfield Changed
In this episode we discuss how reflection seismic technology initiated the modern age of the petroleum industry and the role that German artillery in WWI played in developing seismography.
Questions We’re Hearing From the Field
How does ~$65 oil change the outlook for 2018 activity? What sectors are likely to get the most pricing improvement in 2018? In this podcast we answer some of the questions we’re hearing from the field like these
Why the Average Lateral Doesn’t Exist
Lateral lengths in Q4 2017 averaged 7,700’, up 10% from the prior year. However, oddly, no operators drill 7,700’ laterals; instead, lateral lengths tend to either be 5,000’, 8,000’ or 10,000’ long, distances which have changed very little for several years. What is driving the increase in average lateral length and will this change going forward?
How Did 2017 Turn Out for 5 Markets and 5 Companies?
We compare 2017 with 2016 to look at the change in revenue in five equipment and service markets and discuss how this impacted revenue growth for five “bellwether” oilfield service companies.
The Day the Oilfield Changed
In 2018, we’re introducing The Day the Oilfield Changed, a series that reviews technical breakthroughs or commercial developments that fundamentally altered the nature of the upstream petroleum industry. In this initial episode we discuss how the creation of drilling “mud” enabled the discovery of the Spindletop field 117 years ago this week and initiated the Gulf Coast oil and gas industry.
Five Predictions for 2018
With 2017 now in the books, Richard and John start the new year with five bold predictions for the coming year. Will Brent oil futures exceed $65 at the end of 2018? What will North American frac sand demand total in 2018?
The Rising Cost of Failure (rerun)
We revisit one of our more popular episodes where we discuss how longer laterals are raising the stakes. In this look back, let's see where we were right and where we were wrong. Failure comes at an increasing cost and is changing how operators work with contractors. Richard & John dive deep into the psychology of "operator incentive" and how contractors will be responding as wells get bigger.
Top 3 Oilfield Stories of 2018
Richard and John address three issues expected to emerge in the coming year which will likely have a significant impact on post-2018 activity. The range of the discussion includes: What is a “bubble point”?; “backwardization” in the futures market; and the cost of rail transport.
Holiday Gift Ideas
Black Friday has come and gone, and you still need to ideas for stocking–stuffers for your family and friends. Knowing that nothing provides the joy and satisfaction that comes from watching a Hollywood classic, Richard and John count down their top 10 list of favorite oil-centric movies.
The global cementing services market has increased ~50% in 2017 due to the increase in footage drilled across the US and Canada. Yet, we find cementing isn’t always a huge topic of conversation. In this podcast we discuss the important purpose of cementing jobs, describe how they are performed and the materials involved.
Lease Operating Expenses
While breakeven costs drive new field development, lease operating expenses (LOEs) drive well abandonment. In this podcast we identify the components of LOEs and compare and contrast lifting costs for vertical and horizontal wells.
The Ups and Downs of Laterals
An emerging issue in the US oilpatch is the set of completion and production problems created by long, crooked laterals. In this podcast we discuss how prioritizing ROP (rate of penetration) over wellbore trajectory can result in increased inefficiencies in stimulation, wireline, coiled tubing and artificial lift operations.
Rate, Density, and Time
Active horsepower and proppant volume typically are the two ways used to gauge the condition of the frac service industry. In this podcast we discuss the disconnect that has emerged between these two metrics since 2014; one shows robust growth while the other indicates no change. What’s going on?
Oilfield Inflation Trends
US land drilling activity peaked and then declined slightly during Q3 2017 as operators adjusted their capex budgets in light of softening oil prices. But what was happening in the regions and market segments where oilfield inflation was still rising in the third quarter?
Profitability Isn’t What It Used To Be
Although activity is up sharply this year, oil service firms have yet to see their profitability return to the pre-2015 levels that investors expect. In this podcast we discuss how the “lower-for-longer” mindset driving the focus on efficiency is shifting the oil service industry discussion from “return on sales” to “return on assets”.
Thousands of equipment and service firms participate in one or more of the many different market segments that comprise the upstream sector of the global petroleum industry. In this podcast we tell you which firm is currently the market share leader in each of 32 segments, as documented in our Oilfield Market Report.
Questions From the Field
With 2017 now mostly in the books, attention is shifting to issues that might impact the oilpatch over the mid-to-long-term. We're answering questions like: When will the rate of oilfield inflation slow down? When will offshore activity start growing again? Why is Unit Manufacturing the most volatile of all the OFS market segments?
Well intervention is a term that has different meanings for drilling, completion, and production operations. In this podcast we discuss one of the segments of the well intervention market, the rental and fishing services sector, its drivers, and its main tools.
Frac Flowback Services
Demand for all types of completion-related services has jumped sharply this year in response to the recovery in US drilling activity. In this podcast we discuss specifically the use of flowback services in hydraulic fracturing operations, and how it is affecting the market.
Hurricane Harvey and the E&P Supply Chain
Texas and Louisiana have only just begun to recover from the devastating effects of hurricane Harvey. In this podcast we discuss its impact on the E&P supply chain and how that might affect activity in the US and around the world.
Clues To Where Activity Is Headed
After having risen for 14 consecutive months, US rig count has stalled in recent weeks in response to sub-$50 oil prices. In this podcast we discuss the clues that appear to indicate where activity is headed over the near term.
Changing of the Guard
The generational change taking place in oil companies and oil service firms, as more and more Millennials find their way inside, is disrupting the traditional sales process in the US oilpatch. In this podcast we discuss prior relationship-based selling practices and today’s data-centric approach.
Why the Land Department is Important
Shale resource development has made lease acquisition a key factor to the success of many oil and gas companies. In this podcast we contrast and compare past leasing practices to current operations. How has extended-reach drilling impacted leasing? How do operators keep lease acquisition costs manageable?
Cased Hole Wireline Services
Demand for all types of completion-related services has soared in response to the recovery in US drilling activity that has taken place this year. In this podcast we discuss the use of cased hole wireline units in completion and production operations, with a specific focus on their use in hydraulic fracturing operations.
What We're Hearing From the Field
The story of this year’s recovery in the US oilpatch is well-documented; less well known is how current practices are testing this generation of drilling and completion equipment to the limit. In this podcast we discuss what we’re hearing about failure rates for MWD tools, limits of coiled tubing units, and other problems.
What Can the Oilfield Learn from the Dallas Cowboy Cheerleaders?
While a wellsite and a football sideline might seem to be quite different, in this podcast we compare the skills each needs in terms of planning, focus and teamwork to get the job done right.
How are key acquisitions impacting the market?
This episode, we talk about the artificial lift market and evaluate technology trends in this sector. Who are the leading players? How much of the market is associated with rod-lift systems? Also how some key acquisitions are impacting the market.
What is in short supply this summer of '17?
In this episode we identify some of the important shortages that have emerged as US drilling activity has more than doubled over the past year and discuss why these bottlenecks have occurred and how they are impacting project timing.
Frac Service Revenues: Days of Future Passed?
In this podcast, we discuss why the revenues of frac service firms continue to lag behind earlier levels, even though physical measures of US frac activity (i.e., stage count, proppant volume) are poised to exceed the 2014 peak.
How much drilling happens at $45 oil?
In this podcast, we discuss the short term outlook for oil prices and US drilling, the most important factors impacting activity going forward, and questions regarding resources and ramp up for producers.
Technology Adoption in the Drilling Industry
This episode is a primer for future discussions about new technology in the oil and gas business. Richard & John discuss the factors that determine technology adoption and the industry's history, particularly with regards to rotary steerable technology. Produced by Charlie Spears.
We don't care about efficiency and neither should you.
Counterintuitively, the most important factor for we well these days is not drilling efficiency but rather, recovery rate. We have to get pretty detailed on this one, so strap in and listen to John's breakdown of why this is. Also, we've got something for all those Metallica fans out there!
A bbl of monkeys!
12 Questions in 17 minutes! This week we address the gamut of questions asked us over the weekend. Topics include: New vs old wells, Drilling Fluids Profitability, "Pressure Pumping" vs "Fracking", Rotary Steerable Directional Drilling, "TD", and more! Also, John gives a fascinating & unexpected answer to where the abbreviation "bbls" comes from - it's not what you'd expect!
How much proppant do we use these days?
Richard & John talk proppant. Where the market is growing, the size of that market, and how the sand gets to market. Unit trains and minor league soccer also discussed! John also impresses us with some quick mental math.
What is OneSTIM & is it a game-changer?
Everyone's talking about OneSTIM. The Spears evaluate horsepower, downhole tools, competition, and the relationship between Schlumberger & Weatherford. Richard & John both come to the same conclusion this week!
How did Q1 2017 perform?
Richard & John discuss what the first quarter of 2017 will look like. Land is recovering, offshore still down.
The Rising Cost of Failure
Multiple pad drilling + longer laterals mean the stakes are rising. Failure comes with an increasing cost and is changing how operators work with contractors. Richard & John dive deep into the psychology of "operator incentive" and how contractors will be responding as wells get bigger. Episode sponsored by Oilfield Logix.
How much water does the oil & gas industry use?
We talk volume, method, and outlook for various sectors of the oilfield equipment and services water business. ~95% of water is used in the completion, fracking process and only ~5% on the drilling side. Episode sponsored by Oilfield Logix.
Horizontal wells laterals are getting longer across the U.S. Why is that? What do the next few years look like? Richard & John talk about the history of horizontal drilling in the U.S. and the significance of the changing market in 2017. Sponsored by Oilfield Logix, an well construction data mining company.
What is oilfield inflation & how fast is it growing?
Richard & John discuss price inflation of oilfield services and equipment. What affects the cost of drilling? How do we measure it? What can we expect in 2017?
The Permian Basin
The Spears discuss outlook for the Permian, an exciting play in a boring part of Texas. Richard has a novel way to measure the state of the market and John gets a perfect score on the "lightning round".
How big is the frac market & what does the future hold?
Richard & John discuss the hydraulic fracturing market in North America. How big is it? How do we measure it? What does the next 24 months look like for domestic fracking?
What Is A Drilling Rig & How Do We Forecast Drilling Activity?
Richard & John Spears answer your questions about the oilfield services market. This episode we discuss drilling rigs & drilling activity.