Friday, July 20, 2012

Fracking: US Drillers Find Respite in Guar War (BHI; SLB; HAL)

Baker Hughes and Schlumberger reported today and were up 9.20% and 1.01% respectively.
Halliburton reports on Monday and was up 1.85%.

Following up on yesterday's "Earnings Heads-up: "Guar sowing down in India, still time to catch up" (SLB; HAL; BHI)"
From Reuters:

* New guar supplies come to U.S. market
    * Guar prices now at $5 a pound, half the levels in May
    * Halliburton has four months of supply in stock
    * Indian imports at risk as farmers slow guar sowing

    By Selam Gebrekidan
    NEW YORK, July 20 (Reuters) - U.S. oil and gas drillers are
finally catching a break from the surging cost of a tiny seed at
the heart of the nation's oil and natural gas bonanza. 
    Prices over the last few weeks have more than halved for
guar gum, which thickens the slurry of water, sand and chemicals
pumped into wells during the hydraulic fracturing process used
to tap oil and gas from unconventional shale plays.
    This about-face from a surprise quadrupling of prices during
the first five months of 2012 came after top buyer Halliburton
Co amassed a four-month "strategic reserve" and
suppliers that had been sitting on last year's stocks unleashed
them on the market. 
    Guar spiked to $12 per pound in the second quarter but has
since dropped to $5, Baker Hughes, North America's
third-largest fracking-services provider, said on Friday. FTS
International, another top oil-service company in North America,
had pegged the second-quarter peak at $14 a pound.
    The price jump caused earnings for oil services companies to
tumble and threatened to stall the U.S. energy boom. Now,
however, the industry is getting some relief. 
    "It looks like there's plenty of guar out there, and the
market is starting to balance itself," said David Pursell,
managing director of Tudor, Pickering, Holt & Co.
    This price drop may cut costs by nearly $100 million a month
for big oil-service companies. For example, Halliburton, the
leading fracking services provider, uses 12 million to 14
million pounds of guar a month, according to Barclays estimates....MORE