ProFrac Holding announced it will retire roughly 400,000 hp while ProPetro took a $189 million impairment in Q3 as pressure pumpers grappled with managing their legacy frac fleets. In a market with tight demand, frackers are deciding the diminished returns they can command for Tier II diesel-only equipment are not worth the maintenance.
Pressure pumpers have universally noted the frac market’s division. They have been able to command higher pricing and longer-term contracts for electric-powered frac fleets, with Tier II fleets appealing to lower-budget customers. Between the two extremes are fleets using Tier IV dual-fuel engines, running on a mix of diesel and natural gas.
Frackers’ need to manage capex is also squeezing out Tier II equipment. While attrition has accelerated as fleets run for longer time periods, reinvestment has slowed amid limited capital, leaving contractors prioritizing uses with the best returns.
Patterson-UTI fleets pumping ‘21+ hours a day,’ leading to Tier II attrition.
“We’re pumping now 21-plus hours a day,” Patterson-UTI Energy CFO Andy Smith said on an Oct. 24 earnings call. Fracturing companies have “really gotten very efficient on site … but it stands to reason that should increase attrition,” starting with the less economic Tier II fleets.
Even with operators cutting activities amid low natural gas prices and E&P consolidation, companies have argued the frac market is closer to balance than totals of available horsepower might suggest, as supply numbers may include outdated equipment. The increased frac efficiency could also be a mirage that will dissipate if legacy assets return to the oilpatch.
“When you have a market that drops from around 280, 290 fleets a little over a year ago to around 200 to 210 … everybody looks like heroes because you’ve consolidated the best equipment in the business and that stuff is still working,” ProFrac CFO Austin Harbour said on a Nov. 5 earnings call. “When you start adding fleets back then you start running into equipment issues because you’ve already consolidated the best assets in your business.”
RPC and ProPetro keep total hp steady, retiring the old while adding the new.
After a review of its assets, ProFrac decided to retire roughly 400,000 hp in diesel-burning frac pumps, finding the legacy equipment unworthy of reinvestment, executive chairman Matt Wilks said on an Nov. 7 earnings call. Instead, it will invest in fleets with e-frac and dual-fuel technologies, which Wilks said continue attracting new inbound requests for additional deployments.
ProPetro also said that it will stop reinvesting in diesel-only equipment—making up 25% of its overall fleet total—although some will remain in circulation. Instead, the company took the $189 million non-cash charge, reflecting the “significant shift in customer preference away from Tier II” by reducing the assets’ book value.
Patterson-UTI, which bought pressure pumper NexTier Oilfield Services last year, has spent much of this year whittling down Tier II horsepower it deems unworthy of additional capex. It expects to retire nearly 400,000 hp of Tier II equipment by YE24, reducing its total pressure pumping power by roughly 10%.
RPC Inc., owner of Cudd Pressure Pumping, finds pricing is more pressured for diesel equipment amid low demand and the fleets’ inability to run on lower-cost natural gas, while Tier IV dual-fuel fleets have “solid demand and have better visibility with dedicated customers,” with some commitments running through 2025, CEO Ben Palmer said on an Oct. 24 earnings call. Rather than mothballing its diesel fleets, RPC is upgrading older equipment to Tier IV, keeping total horsepower stable.
RPC deployed an upgraded Tier IV fleet around mid-year but has no others in the works. Palmer said its next customer commitment will probably insist on Tier IV equipment, and assembling a full upgraded fleet takes about nine months.
ProPetro is also retiring horsepower as it refreshes its equipment. It has managed to keep its active fleet count at around 14 since mid-2023, during which it added four Force e-frac fleets, retiring 330,000 hp of older equipment in the process. ProPetro also intends to add two or three e-fracs in 2025 while keeping its total active fleet counts around 14 or 15.
Halliburton is taking a more passive path toward revamping its frac equipment. Instead of choosing to “push the pedal and spend” to accelerate adoption of its Zeus electric pumping units, Halliburton will make them available and count on customers seeing the value, CEO Jeff Miller said on a Nov. 7 earnings call. “We’re going to stick with our maximized value approach and let the diesel retire or move outside the country,” he said.
Fleet revamps also bring other changes. ProPetro canceled a lease for two maintenance facilities because e-frac maintenance is less involved and can often be done without moving the fleet out of the field. A diesel engine has 3,500 parts, many of which are moving, ProPetro CFO David Schorlemer at an Aug. 29 industry conference. A Tier IV dual-fuel engine adds another 100 parts for natural gas ports. By contract, a Force e-frac has “two big black boxes: one of them is a transformer and the other is a variable frequency drive,” Schorlemer said. “The notable moving parts are the door hinges to the cabinets.”
Find more great news and exclusive data on the oilfield services sector in the latest issue of Oilfield Pulse.
About Enverus Intelligence® Publications
Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.
