Upon review of second quarter earnings reports from industry participants, analysts are rather bullish on future demand for hydraulic fracturing in North America.
Halliburton in particular is looking to take advantage of projected increases in demand for fracking after two years of falling prices. "On our last call, some of you may have been skeptical when I said I was beginning to feel the turn in North America .... Today, we are not feeling the turn, we are in the turn, and I feel even more excited than I was last quarter," said Halliburton CEO, David Lesar, on a second-quarter earnings conference call on Monday. Halliburton plans to immediately begin increases in its fracking crew and fleet of equipment to take full advantage of improving demand.
Baker Hughes shared the optimism of Halliburton, stating that pressure pumping supply is becoming tighter, though still with roughly 20% excess. Baker Hughes expects increased drilling activity and improving market conditions in North America to lead the way to a 15% increase in profits from operations in the third quarter.
Analysts have also been encouraged by these recent trends in the industry. "I think it is a kind of vote of confidence that demand is on its way back," said Stewart Glickman, IQ analyst for S&P Capital. "You're seeing tightening in overall frack capacity. People are going to like this," added Capital One Southcoast analyst Luke Lemoine. Looking back, analyst Mike Breard of Hodges Capital quipped "A year ago, the question was 'how bad can it get?' The question now is 'how good can it get?' It does look like the fracking business has definitely bottomed out; it's just a question of how fast it's going to improve."
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