![]() These operators are seeing greater consistency, “by getting the best directional driller on six rigs as opposed to being on only one.”Īnd much like their drilling contractor cousins, the DD/MWD providers have seen day rates squeezed by as much as 40% since 2015. Two operators paving this path are Chevron and Hess, which have moved their directional drilling staff into remote operation centers in Houston. “Going forward, we see a lot of operators that are looking to vertically integrate by bringing the directional drillers into their facility,” he added. “That was not something that we saw Schlumberger do 4-5 years ago-all that technology stayed in-house,” said Gibson, explaining that the bigger companies in this segment inherently have higher overhead than smaller firms and that renting or selling licenses allows them to maintain a market presence at a lower internal cost. Schlumberger, for instance, has begun to rent out its MWD equipment, including rotary steerable systems, to other directional drilling companies. The big four accounted for a combined 16.2 million feet of drilling in the same span.Īs a result, some of the legacy providers are re-thinking their business models. Based in the Houston-area, ProDirectional leads the Texas market with 10.6 million feet drilled, or 8% of the 132.7 million feet drilled in Texas during the year. Not a single firm in Texas is capturing more than 9% of the available work. Market Shifts, Business Strategies Shift Too ![]() Today, 80% of the DD/MWD work is done by 20 different firms. Gibson noted that these figures could be dragged down somewhat because of state reporting methods which only require that the MWD company listed as the “surveyor of record.” This means a separate company could have been used for the directional drilling in some instances, and there are a handful of firms that only offer MWD services.īut the high-level picture nonetheless shows that DD/MWD technology has become more democratized than ever. But by 2017 that figure dropped to just over 20% in 2017 before falling sharply again to the 2018 level of around 16%. The individual market share for the legacy service companies are:Īs recently as 2013, these companies collectively shared 28% of the Texas DD/MWD market, by far the largest in North America for such services. The market is heavily dominated by everybody outside of that group-private equity, independents, and publically traded companies,” said David Gibson, founder of Gibson Reports, which tracks DD/MWD activity for the shale sector. “Schlumberger, Halliburton, Baker Hughes, and Weatherford, they only make up 16% of the total footage drilled in the state. ![]() The DD/MWD arena has become so crowded that the “big four” service companies have seen their positions shrink substantially since the start of the bust, according to regulatory data compiled by Gibson Reports. In 2019, there were 78 DD/MWD companies operating in Texas-with a little under half working out of Midland County, the Permian Basin’s primary hub. This is particularly the case for directional drilling (DD) and measurement-while-drilling (MWD)-two cornerstone technologies required to construct a horizontal wellbore. Since the onset of the downturn, the Texas drilling market has become one of the most competitive spaces in the upstream industry. ![]()
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