Oil Investors: Do You Track Sand Usage? These Analysts Do

A new report by Jefferies focuses on the oil services and equipment space. Of the hundreds of metrics used to assess the oil industry, Jefferies analyst Brad Handler focuses on what the latest frac proppant data says about the current state of the oil services industry and the latest shifts in market share among leading companies.

The Numbers

A proppant, typically sand, is the solid material that frackers use to keep fractures open. According to the Jefferies report, the most recent reliable proppant per well numbers from the month of March indicate a 14 percent increase since October of 2014.

Jefferies sees three major drivers behind the increase in proppant per well:

• 1. An increasing proppant intensity for horizontal wells
• 2. A continuing mix shift from vertical wells to horizontal wells
• 3. An increasing focus on the most productive and efficient wells

Related Link: Oppenheimer Bullish On Stocks, Bearish On Gold And Oil

Market Share Shifts

Jefferies uses a breakdown of proppant data as an indicator of shifting market share among frackers. Year-to-date proppant data indicates that Halliburton Company (NYSE: HAL) has been the biggest market share winner, adding about 7.0 percent.

Other share gainers include Patterson-UTI Energy, Inc. (NASDAQ: PTEN) (+1.25 percent) and Liberty Oilfield Services (+1.1 percent).

The biggest market share losers so far in 2015 are Baker Hughes Incorporated (NYSE: BHI) (-4.2 percent), Weatherford International Plc (NYSE: WFT) (-2.5 percent) and Nabors Industries Ltd. (NYSE: NBR) (-1.6 percent).

Stock Picks

Overall, Jefferies is neutral on oil services and equipment stocks, but analysts do see opportunities for selective buying.

The report names the following as top stock picks in the space:

• Halliburton
• Baker Hughes
• C&J Energy Services, Ltd. (NYSE: CJES)
• Hi-Crush Partners LP (NYSE: HCLP)

Rowan Companies PLC (NYSE: RDC)

Image Credit: Public Domain