PTEN
#Working ---+
I think you ---+ that information should properly come from Seventy Seven at this point.
Yes.
So there are some areas of cost, that I think the entire industry is sensitive to.
In terms of labor on the rigs, we're not seeing the cost pressure yet.
In terms of labor and pressure pumping, I think we're going to start to see some pressure on labor.
And in general, we're going to have costs related to labor for the recruiting, the onboarding, and the training that we have to do to get people back to work.
So that's kind of what's happening in the labor front.
In terms of materials, I think some of the materials and supplies that we use in both drilling and pressure pumping will start to move up, in terms of costs.
But I'm also confident that we're able to manage those, but with activity moving up in general, and our pricing moving up, supplier's pricing is going to move up a bit as well.
In terms of sand, as I mentioned earlier, we see sand pricing moving up.
We see it more so in certain grain sizes than others, where supply is tight.
But I think at the same time, we'll also see mines improve production in those grain sizes as well, and the availability as we go into the year.
And so, we have agreements, and we have discussions and negotiations with multiple sand suppliers in multiple basins to ensure that we have the supply.
And so, that we could do our best to ensure that there's some cost competitiveness out there for us as well.
But, overall, the market is improving, the rig count continues to go up.
I'm certainly encouraged by how fast things are moving out of the gate in 2017.
In general, in the industry, I think that we can't activate frac fleets as fast as demand is out there.
And so, that's allowed us to get the pricing improvements on the incremental spreads that we're activating.
And the industry is likely building DUCs as a result of that.
So that's kind of how I see things playing out right now.
We do have a number of spreads that work for customers who source their own sand.
We have also spreads that work for customers who may source their own chemicals, but not their own sand.
But we don't, in general, get into the details of what those percentages are.
And they do change month to month.
Off hand, I don't believe they do.
Yes, I would say, the majority of improvement is coming from activity.
And certainly, we've got two new spreads in Q1 that are adding accretive pricing there, but the majority of the improvement is coming from activity.
Without getting into the details of fluid ins, and the consumption ---+ we mentioned in the financials that pressure pumping, we're allocating $75 million for fleet activations and maintenance.
And so, that maintenance will include fluid ins.
And you've got our fleet activation costs out there, so you can kind of see what some of that might be.
I am encouraged by, for instance, the fact that in our move to using a certain percentage of stainless steel fluid ins for instance, the cost of stainless came down over the last couple of years, not in relation to oilfield or oilfield activity, but more in relation to the cost of nickel and the stainless blend.
So as we move to, for instance, stainless, we're not paying large incrementals for those particular fluid ins.
I think it's safe to say, with us having 1 million horsepower, and then post-merger 1.5 million horsepower, that everybody calls us.
So I don't think there's any sand producer in the US that doesn't contact us right now.
Yes, so we're getting contacted by individuals who are looking to start new mines as well.
And so, that's why, while sand supply is a big concern of mine, we are hearing from individuals that are looking at starting production in sand that's not currently being produced.
So, and I won't get into the details of what we might or might not do.
So, yes, we concur that it is happening.
Yes, my comment in terms of the reactivation of frac spreads, and it's hard for the industry to keep up, was really more of an industry comment, and not so much related to us.
And it's based on discussions with customers.
And it's what drove us to be able to get the incremental pricing on the incremental spreads that we're putting out.
But overall, the utilization of the industry still has to improve before we get wholesale pricing.
When we look at our overall utilization, at the end of the first quarter, and going into the second quarter, we're going to be at about 60% utilization, and really pleased to see that number for a change.
As rig count continues to go up in 2017, I think we will see further additions to active fleet, in terms of pressure pumping, and improvements in the overall utilization.
And at some point, at a certain rig count, you're going to see the ability for pressure pumping pricing to move up higher across the industry.
So we're certainly encouraged that we're going to be at 60% utilization in Q2.
We will have to wait and see what the rest of the year looks like.
So I can only speak to us, and majority of our work, over 90%, is 24-hour operations.
Now some maybe 24/five days a week, some maybe 24/seven days a week, but the majority of our work is 24-hour operations.
