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GASFRAC Energy Services, Inc. Message Board

  • mountaintoptrader mountaintoptrader Aug 9, 2011 9:04 PM Flag

    Q2 CC Notes

    Gasfrac conference call 08/09

     2011 Capital program
    o Have 4 sets in CA, 1 set in US, 1 set transiting US customs
    o A few pieces will spill over into January (formerly all deliveries by November)
     Utilization
    o Flooding issues in Alberta still adversely affecting utilization
    o Half-way through 3Q, utilization is running 30% (rather than 40-45% as targeted with addition of back end equipment.) Business not being lost but postponed.
    o Sounds like 3Q will be better than 2Q but lighter than expectations
    o Historical revenue per set has been $50M. expect that to grow to $60-$65M
    o Field margins running about 45%
    o Operations in US will give them opportunity to shift equipment out of areas affected by the annual spring breakup in CA.
     Propane recovery unit
    o First time a mobile unit ever built
    o Just completed first field test, going back for software modifications
    o Single well mix is different than multi-well mix found at traditional gas treatment plants. Need to learn more about the mix and calibrate software to handle
    o Have already identified how to build lower cost units
    o Expect to field commercial unit sometime in 4Q
    o Half dozen customers interested in propane recovery service
     Business development
    o Customers order 3-10 well treatments, then wait for 3 month initial production results before committing to additional work. (This was process in CA and now same in US.)
    o Once customers see the increased initial production and reserves, they commit to more treatments.
    o Emphasis has been on working with as many different customers and fields as possible to complete the “prove it” stage.
    o Historically, they have avoided tying up sets exclusively because it would negatively impact overall market development.
    o With 6 sets in hand they are in a position to start entering into some long term contracts without negatively impacting overall development. Better position with 10 sets.
    o Pushback from customers on availability? One prospective customer inquired if they would ”send the whole fleet down here?”. Indicated companies can’t do “phase change until they have the size to cover entire operation”.
    o They “expect long term contracts before end of 2011”. Won’t disclose names.
    o Indicated confidentiality agreements prevent disclosure of customer names.
     Canadian outlook
    o Canadian backlog has grown, utilization should improve
    o Indicated they have enough CA business to keep existing 4 sets busy through year end. They were pressed hard for more information and indicated they have enough business in CA for the 4 new sets as well. Clearly, their backlog has increased well beyond what it was at end of 2Q.
     US outlook
    o Only one set is working in the US (2nd set at border)
    o Were using two crews with one set for training.
    o First jobs in May and customers have indicated positive results (3 months IP)
    o Have completed treatments for 11 different customers
    o Are concentrating on touching as many reservoirs as possible even though it means long transportation runs
    o Referred to “controlled rollout” due to the January incident. They have maintained two crews with CA supervision working with one frac set in order to insure uniform training

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    • Thanks,very good message.

    • Good summary of the conference call. I was glad I listened myself as there were some posts which were misleading about what was said on the call. After listening I was encouraged that were still remaining essentially on track. I think one of the most positive aspects of the call was the fact their going to start signing some long term commitments in 4Q. Once they do this they should be in a position to start ordering new sets of equipment as it was also clear there are a number of areas that they haven't touched from a business development perspective.

      • 1 Reply to lt_capital
      • I posted one of the misleading summaries and have listened once again and added meat to the lead poster of this thread (my added comments prefaced with "&":

        Ø 2011 Capital program

        o Have 4 sets in CA, 1 set in US, 1 set transiting US customs
        &Takeup of equipment in US is pretty much as expected. They slowed down due to incident in March.
        &New crews being trained by experienced CA crews
        &Canada market: Substaintial backup for the 4 crews there..

        1 sets operating in US
        Completed wells in New Mexico, Texas, and Oklahoma 2nd Set to move to Colorado.
        o A few pieces will spill over into January (formerly all deliveries by November)

        &Added capacity receivable each month.

        Ø Utilization
        o Flooding issues in Alberta still adversely affecting utilization
        &Some areas very wet. Last week to 10 days have show pickup in operations. Have enough backlog to operate the 4 sets in CA full time.

        o Half-way through 3Q, utilization is running 30% (rather than 40-45% as targeted with addition of back end equipment.) Business not being lost but postponed.
        o Sounds like 3Q will be better than 2Q but lighter than expectations
        o Historical revenue per set has been $50M. expect that to grow to $60-$65M
        o Field margins running about 45%
        o Operations in US will give them opportunity to shift equipment out of areas affected by the annual spring breakup in CA.

        Ø Propane recovery unit
        o First time a mobile unit ever built
        &Improves the back hand side of equipment..ie. delivery of propane from off-site sources. Added back end will improve equipment utilization from 30% to 45% or more.
        o Just completed first field test, going back for software modifications
        &Expect it back in the field within the next 10 days. Variation in propane mix within well resources needed to be adjusted based on real data.
        o Single well mix is different than multi-well mix found at traditional gas treatment plants. Need to learn more about the mix and calibrate software to handle
        o Have already identified how to build lower cost units
        o Expect to field commercial unit sometime in 4Q
        o Half dozen customers interested in propane recovery service
        ----------------------------------
        Cont on reply to this note.

    • Thanks for your CC notes, they pretty much cover what I heard too.....hope WTI stays $82 to $87 for next couple of years and NG finds $5.25, keep the demand up...here is a bit of stuff to read......from 8/4/11

      http://naturalgasforamerica.com/part-ii-north-american-pressure-pumping-trends-international-implications.htm

      What do you think.......get a crew down to Argentina in a couple of years and show BH how to get things done!

      Have a good one!

      Snipe

    • This company's future lies in the U.S., away from the spring thaw problem. Weather problems do not result in delays, they result in what are in effect permanent revenue losses. since the company does not have the capability to make up for lost time.

      Also noted revenue per frac dropped to $202 from $211--did anyone ask why?

 
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