The Drilldown: in-depth answers to oilfield questions | w/ Richard & John Spears: Recent Episodes
Spears & Associates
Richard & John Spears answer your questions & 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 & equipment and discuss industry current events.
New episode every Monday! Got a question? Send it to drilldownshow@gmail.com
This week we're doing an oddball episode -- does idling your engine waste fuel? Yes, we're actually gonna talk about this this week! Produced by Charlie Spears
This week we discuss how OPEC determines their production quota and how the war in Russia their decision making. Produced by Charlie Spears
This week we dive into our methodologies for tracking oilfield services domestically & internationally.
Exploration has slowed, so are oil companies on a ticking clock? Produced by Charlie Spears
Is M&A activity back in the oilfield service sector? It looks like the industry is heating up again, we dive into what the landscape currently is and where it is going. Produced by Charlie Spears
Oil prices are no longer the primary driver of oilfield activity. Richard and John talk about the recent divergence in oilfield service profits, activity, and oil price.
We're back from a deep hibernation and boy have things changed! This episode we talk how to value oilfield service companies in the current market environment, how commodity pricing doesn't drive the industry as much as it used to, and how investor mindset has changed. Produced by Charlie Spears
Richard and John review the challenge to US oilfield service firms in accommodating a significant increase in oilco activity in 2022. Topics addressed include market segmentation by operator size, contract duration requirements, risks from new technologies, and the potential for market consolidation.
Richard and John preview the upcoming discussions between oil company managements planning to significantly increase capital spending in 2022 and possible pushback from investors. Topics addressed include long-term versus short-term demand expectations, “resilient” reserves and “bifurcated” investment groups.
Richard and John review the findings the EIA’s newly-released outlook for the global energy market to 2050 and discuss its implications for the oilfield equipment and service industry.
Richard and John identify next year’s market segment winners and losers and discuss the factors driving differences in the rate of revenue growth in 2022.
Richard and John identify 2021’s market segment winners and losers and discuss the factors driving the differences in revenue growth this year.
Richard & John go over common biases when forecasting....anything.....but especially the oilpatch.
Richard and John discuss the 2022 outlook for US frac activity, including rig activity, DUC drawdown rate and frac pricing.
Richard and John discuss how they expect US operators will decide to allocate next year’s free cash flow.
We're back after a summer hiatus. This week we recap what's gone on this summer, quarterly financials, and how operator price assumptions affect their decision making in 2022.
Rising oil prices & less anticipated demand -- how do we interpret conflicting projections for oil demand?
In the third of a two-part series Richard and John discuss how challenges in implementing net-zero emission (NZE) plans could revise the (bearish) long-term outlook for oil and gas demand. What are some of the key issues that could impact how quickly NZE goals will be realized?
In the second of a two-part series Richard and John discuss how current drilling and completion operations are being impacted by long-term climate change expectations and what the implications could be for US oil and gas production.
Richard and John discuss the factors driving the Q1 increase in US drilling and completion costs, the capital spending outlook for US operators, oil demand elasticity and the outlook for oil prices.
Richard and John discuss four oilpatch events/trends they expect to emerge in Q2 2021: shortages, restructuring, bifurcation, and SPACs.
The ongoing recovery in US drilling activity has caused some spot shortages for materials to emerge. At the same time, the number of new job openings for oil service workers has more than doubled since Q4 of last year. Richard and John discuss what this might mean for the cost to drill and complete wells, efficiency, and where the next shortages are likely to appear.
Richard and John discuss whether net-zero initiatives will be sufficient to keep ESG-sensitive funds invested in oil companies. Plus a Gilbert and Sullivan reference!
Richard and John review information regarding recent trends in oil service activity and pricing found in the Spears industry dataset.
Lost in last week’s headlines about sub-zero temperatures, rolling blackouts and soaring energy costs was news about what has become the most important price for the US petroleum industry. Richard and John discuss SCC and its impact on the oil and gas sector.
Richard and John review the financial performance, capital structure and capex activity of oil service firms accounting for over half the global oilfield equipment and service market. Will their improved financial performance trigger an increase in M&A activity in 2021?
Are there millions of unplugged abandoned wells in the US as some have claimed and whether it would be worthwhile to plug them to cut down on GHG emissions and provide jobs. We also talk enteric fermentation, or methane emissions per cow-year.
Richard and John use voice of the customer responses to reveal challenges in determining trends in frac efficiency. the McNamara Fallacy will prioritizing efficiency over effectiveness continue?
Richard and John review the financial performance and capital structure of publicly-traded oil companies accounting for one-third of the US market and discuss the potential for a sharp recovery in their capital spending in 2021.
Richard and John discuss the lessons learned from comparing their estimates of market segment growth with Halliburton’s actual Q4 2020 financial results. This episode also features the introduction of the Puzzler Challenge!
Richard and John discuss 10 questions being asked by investors, operators and service firms in a joint presentation made to the Mid-Continent Section of the Society of Petroleum Engineers (SPE) on 1/12/2021. Charlie Spears
In their first podcast of the new year, Richard and John highlight some of their expectations for the US oilpatch in 2021 and raise two issues for further consideration.
In their last podcast of the year, Richard and John step away from the oilpatch and highlight some of the more unusual events and best pivots of 2020.
This week we're broadcasting from our video chat with the Gulf Coast SPE luncheon. We kick off by discussing whether US operators can hold output steady, de-leverage AND grow shareholder returns at the same time. Recorded live from Richard & John's presentation to the SPE/API (Gulf Coast) luncheon on 12/8.
Richard and John respond to a couple of questions about drilling activity in the US and the Middle East.
Just in time for Thanksgiving, Richard and John identify where “high calorie” wells are drilled and what the outlook is for those markets.
Richard and John discuss what recent declines in drilling activity outside North America appear to say about NOC intentions regarding future oil production capacity.
Richard and John present three scenarios for frac activity and US oil production for the coming year and discuss the implication for oil prices. Other topics addressed include: How a sharp DUC drawdown just delays a collapse in US oil output to 2022
Richard and John discuss what HAL’s Q3 results mean for US frac activity. Also - What Bobcat Goldthwait, the wives of Henry VIII, and invading Russia have in common
What recent oil company mergers say about the outlook for E&P activity, supply chain consolidation and market share growth. Produced by Charlie Spears
Richard and John discuss elements impacting free cash flow for US operators and how this will determine E&P capex and rig activity going forward. Specific topics addressed include: “Haircut” given to spot oil prices when setting capex budgets Royalties, production taxes and operating costs % going for debt reduction and shareholder returns
Richard and John discuss topics which caught their attention this week, including: Caterpillar’s acquisition of Weir; Saudi breakeven pricing; Q3 OFS earnings expectations; and progress on nuclear fusion.
Anecdotal evidence from Richard’s current road trip suggests US economic activity is largely returning to normal and explains why the EIA has revised its estimates of Q4 US oil use significantly higher in recent months. Richard and John discuss how this would impact inventory drawdowns and oil prices.
Schlumberger has begun to reduce its exposure to the North American oilpatch. Richard and John discuss how this process will likely result in consolidation of important segments of the NAM market. We also chat about -- Does the possibility of a Biden administration impact the timing and/or success of this process? Will competitors or customers object to market consolidation?
Major oil companies are increasing their investment in renewable resources as they transform into btu- agnostic energy suppliers. Richard and John describe the US renewables market and discuss the outlook for this sector.
The recently-announced combination of Liberty and Schlumberger is shaking up the NAM frac market. Richard and John discuss the outlook for activity and pricing over the coming year.
Richard and John discuss the process used to create and update the market size and share estimates found in the Oilfield Market Report.
Natural gas demand is up, pricing recovers a bit. Is this sustainable going forward? We talk about what it looks like as the LNG market tightens up. Produced by Charlie Spears
Our podcast today goes out to Warren Buffet & similar investors. We see a 3-phase recovery by market sector. Where & when should investors deploy their capital? Produced by Charlie Spears
With reserves plentiful but facing limits on CO2 emissions, oil companies are re-focusing their R&D programs. What implications does this have for the oil service sector? Other topics discussed include: The link between oil service revenues and R&D budgets R&D’s “Blutarsky moment” The optimal length of a lecture
Looks like we were a bit too optimistic for Q2! This episode we contrast and compare the Q2 financial results of major oil service companies for clues about what is happening in NAM and International markets and the implications for technology development. Produced by Charlie Spears
Richard & John talk about what happens to oilfield service prices over the next few quarters.
Richard and John discuss the similarities and differences between the theatre business and the oil and gas industry and the challenges each faces in recovering from the pandemic. We also discuss movies with an exclamation point in the title!
How much oilfield product/service line revenues were impacted Q2 as operators' slashed capex and what this means for supply chain resiliency.
Oil's back up, but rig count isn't. Why is that? We also discuss the changing landscape of market predicting.
What's going to happen to all the Drilled but uncompleted wells (DUCS) out there? Produced by Charlie Spears
Some oil companies have recently adopted the goal of reaching “net-zero” carbon emissions by 2050. John and Richard discuss when the net-zero target might start to affect decisions as to what types of exploration opportunities to pursue given the timeline for discovery and development. Other topics include: A brief history of the concept of zero
Exploratory activit has been hit hard by low commodity prices, but Richard & John make the case that it could stage a surprisingly strong recovery. Stranded assets vs profitable production Oil versus gas exploration R&D implications
Richard and John discuss the key dates in 2020 for decisions that will set the course for oilfield activity in the US, Canada and the Middle East in 2021.
Rapid fire questions on EOY oil price, which oilfield service sector will recover first, and Saudi Arabia.
In the spirit of Saturday's virtual Kentucky Derby, Richard & John call the action at the 2020 virtual Offshore Technology Conference.
Richard and John look outside the oilpatch to examples of surviving unprecedented events and overcoming challenging tasks as lessons for today’s oil industry.
Richard and John discuss what the current $16 price differential between WTI and Brent is telling us about the current oil market and what the current $17 price differential between the May and July futures prices is telling us about the future oil market. Other topics addressed include: How much oil is exported on a global basis? How much US production is likely to be shut-in? What type of US production will first come back into the market? Ernest Hemingway and Charles Mackay
When will rig count bottom out? How fast are well costs changing? How will personnel logistics impact drilling/frac efficiency and offshore drilling?
No matter the price of oil, no matter the trend in drilling activity, the number is $150 frac dollars per reservoir foot drilled. The only real switch occurred in Q1 2015 when things collapsed the first time, but $150 is our number. It would take a change in industry behavior to take another step downward in Q2 2020…perhaps that happens, but do we predict it today? Not really.
Global oil inventories are set to increase due to the drop in oil demand and the rise in OPEC+ output. Richard and John discuss how much inventories might rise, how long it will take before they are back to normal, and the implications for US oilfield activity, oil production and oil prices.
Richard and John discuss the near-term impact of $32 oil on drilling and completion activity and revenues for selected market segments and oil service companies. In addition, they consider how the drop in drilling and completion will impact US oil production and what that means for the long-term outlook for oil prices.
Richard and John discuss the “Killers of the Flower Moon”, a book (and soon to be a movie) about a 1920s conspiracy to murder Osage Indians for their oil royalties and what became one of the FBI’s first major homicide investigations.
Richard and John discuss the winners and losers from the three-fold improvement in drilling and frac efficiency realized over the past couple of years.
Halliburton + TechnipFMC --- A Good Combination? Richard & John dive into Jane Austen to analyze the merits.
In the second of a three-part series on ESG issues, Richard and John discuss social issues such as diversity, human rights and security that investors are increasingly using to evaluate operators and oilfield service firms. Other topics include: Total global value of stocks and bonds and the percent represented by sustainable investments. The absence of universally-accepted ESG standards The use and misuse of statistics
ESG (Environmental, Social and Governance) issues play an increasing role in investors’ financial decisions regarding operators and oil service firms, which have begun to take action in response. Richard and John discuss whether these actions are happening fast enough relative to non-industry expectations.
We're talking market segments this week! Which oilfield services sectors do we see growing in 2020? We go through our Oilfield Market Report and take a look at where each market segment is headed.
It's that time again, Richard & John make predictions for this coming year. Tune in in 51 weeks where we tally up who reads tea leaves better. Produced by Charlie Spears
Richard & John compare their over and under predictions for the past year -- how did they do? Produced by Charlie Spears
Richard and John list some of their “Ahead of the Bit” headlines they expect will describe the oilpatch in 2020.
Aramco going public, the switch from production growth to profit growth, and companies ability to deliver on profit growth.
Some presidential candidates have proposed to ban fracking, if elected. Richard and John discuss how such proposals would fare considering the Fifth Amendment and the impact on state governments.
Richard and John contrast and compare the structure and direction of oilfield R&D in a “peak oil demand” scenario relative to today’s industry.
Although the weather is turning colder the banking sector appears to be warming up to Canadian oil service firms. What’s going on?
Richard and John review the time lag between a change in the spot price of oil and changes in rig count and frac activity and discover a surprising relationship.
Richard and John discuss the impact on oil service companies whose services are priced per day when productivity soars and whose costs are incurred per foot drilled. Can long-established pricing practices change?
Many companies are eyeing divestiture. What factors are incentivizing this and what barriers exist?
Baseball, rig activity, and oil prices. Exploring the relationship between oil prices and US monthly rig activity. We dive deep into historical data, going back to 1986, to explain why US rig count has fallen this year and what we should expect going into 2020. Produced by Charlie Spears
Many activist investors are pushing the oil industry to transition or replace itself. Richard & John discuss. Produced by Charlie Spears
You might not realize that the works of The Bard have uncanny parallels to the Oil & Gas industry. This episode, Richard and John demonstrate that former field hands can be cultured too! Produced by Charlie Spears
We discuss the outlook for global oil demand in the coming year and the sensitivity of oil traders to the US-China trade dispute. Produced by Charlie Spears
We discuss the capital & operating costs of E-Frac and estimate the price of natural gas at which E-Frac becomes uneconomic relative to conventional frac units.
Richard & John discuss the slowdown taking place in US oil production growth and what that means for global markets.
How real is the "fracklog"? Richard and John identify the weaknesses in the EIA's method for calculating drilled-but-uncompleted wells and what that means for the US oilpatch. Produced by Charlie Spears
Will OPEC+ be successful in its effort to reduce oil inventories in order to boost prices? Richard and John discuss whether this goal has already been met and when prices might respond. Episode produced by Charlie Spears
Operators and oil service firms have been reporting their Q2 results and what they expect to happen over the near term. Richard and John discuss their key takeaways about activity and the implications across the supply chain.
Richard and John discuss the implications for the US oilfield arising from the lack of oil company M&A activity
Richard & John crack open a book on occasion - what kind of books are we reading and what do we recommend? Produced by Charlie Spears
We discuss the outlook for US crude production under various price/capex scenarios and speculate about the assumptions underlying the EIA forecast of US oil output.
In response to listener's questions, Richard and John discuss the factors that drove the recent merger between Keane Group and C&J Energy Services. How will this affect competition in the oilfield service industry? Produced by Charlie Spears
Our mid-year review! Last January (Ep96) we made some predictions for 2019. How are we doing? This episode we talk crude price volatility, Weatherford, and average frac sand per well. Episode produced by Charlie Spears
While the average breakeven price is often cited for understanding which plays are most profitable, the range of breakeven prices within a play is less reported. Richard and John discuss how the range of breakeven prices from high to low is useful to understanding how much activity might rise or fall as price expectations move up or down.
What would next month's US production look like if we stopped drilling wells today? John describes how new wells are masking steeper domestic production declines. Can the US keep up with the high demand for new wells? Produced by Charlie Spears
A brief departure from our normal podcast. Today we remember those who have sacrificed for our country. "In Flanders Field" by John McCrae "In Flanders fields the poppies blow Between the crosses, row on row, That mark our place; and in the sky The larks, still bravely singing, fly Scarce heard amid the guns below. We are the Dead. Short days ago We lived, felt dawn, saw sunset glow, Loved and were loved, and now we lie, In Flanders fields. Take up our quarrel with the foe: To you from failing hands we throw The torch; be yours to hold it high. If ye break faith with us who die We shall not sleep, though poppies grow In Flanders fields."