San Antonio-based Pioneer Energy Services reported modest rig count growth and a sequential uptick in production services activity during the third quarter, reinforcing management’s earlier view that the market hit bottom in 2Q2016.
The onshore oilfield services (OFS) company reported production services revenue of $40.9 million for the quarter, a 19% sequential increase but 38% below the year-ago quarter. Pioneer said it saw increased activity for all of its production service offerings in 3Q2016, with the most significant improvement in wireline services.
Wireline servicing average pricing totaled $496/hour, up from $485 in the second quarter. Well servicing rig utilization for the quarter was 41%, up from 40% in 2Q2016, while coiled tubing utilization was 22%, up from 20% in 2Q2016.
Pioneer’s production services segment serves producers in the Gulf Coast, offshore Gulf of Mexico, Midcontinent and Rocky Mountain regions.
In a conference call Tuesday to discuss 3Q2016 results, CEO William Stacy Locke reported 14 working rigs for Pioneer across all its operating areas, including 13 in the United States -- six in the Permian Basin, five in the Marcellus/Utica shales, one in the Eagle Ford Shale and one in the Bakken Shale. Pioneer had 11 rigs working at the time it reported its 2Q2016 results, he said (see Shale Daily, July 29).
“As we had speculated in our second quarter call, the second quarter was the bottom of activity levels...we showed steady, although somewhat modest, rig count growth each week since then,” Locke said. “Our third quarter results reflect this improvement in the overall market.”
The future pace of recovery will depend on oil prices, Locke said. A price in the mid- to upper-$40s/bbl will mean “continued modest improvement not dissimilar to what we have today,” he said.
“However, if oil prices move higher, like we anticipate will occur, more into the $50-60/bbl range, we feel the pace of the recovery will improve and that pricing improvement will also occur,” Locke said. “That pricing improvement will probably be regionalized in nature -- supply and demand in a given market will drive that. As we’ve seen, there are voids that have been left in certain businesses and certain markets that will aid in that pricing recovery.”
Revenue for the drilling services segment totaled $27.5 million for the quarter, a 2% sequential decrease and 33% lower year/year. Drilling rig utilization averaged 38%, compared with 39% in the second quarter and 49% in the year-ago quarter. The OFS operator recorded $1.8 million during the quarter in early contract termination revenue. The company said it has now recognized all revenue from early contract terminations in full.
Locke said the company is projecting a 43-45% drilling rig utilization rate in the fourth quarter after averaging 42% in October and reaching 45% as of Tuesday’s conference call.
As for production services, “the momentum that we saw in the third quarter will help offset typical Q4 seasonality, so we think we can actually grow revenues” by as much as 3%, “which would normally be challenging in a fourth quarter,” Locke said.
Capital expenditures (capex) for the third quarter totaled $12.3 million, with total capex for 2016 expected to be $30-32 million, up from its previous guidance of $27-29 million, with the company attributing the difference to rig upgrades.
Pioneer reported total revenues for the quarter of $68.4 million, compared with $107.5 million in the year-ago period.
The company recorded a net loss of $34.6 million for the quarter (minus 53 cents/share), compared with a net loss of $17.5 million (minus 27 cents/share) in 3Q2016.