Diamondback Energy expects oilfield service prices to fall on lower drilling

Nextier Oilfield Solutions

01/08/2023 15:27

By Arathy Somasekhar
       HOUSTON, Aug 1 (Reuters) - Diamondback Energy  FANG.O 
on Tuesday said it expects prices for oilfield equipment and
services to fall in response to lower drilling activity. 
    The comments from the first large shale producer to report
quarterly earnings contrast those from service companies that
have said they would not cut prices. 
    Weaker oil and gas prices have forced U.S. shale producers
to curb spending and cut drilling and completing new wells,
reducing demand for equipment and services provided by oilfield
service companies. 
    "With the reluctance (by producers) to increase spending, we
believe that we will continue to see a softening in cost from
our friends on the service side," Chief Executive Officer Travis
Stice said on a post earnings call. 
    Producers were expecting a rationalization of costs after
prices for services and raw materials climbed for about two
years, Stice said, adding that it was premature to call it a
deflation.         
    Meanwhile, oilfield services firm Liberty Energy Inc
 LBRT.N  last month said industry pricing is unlikely to decline
with the fall in oil well drilling and completions activity in
the second half of the year, while Nextier Oilfield Solutions,
said it would stack, or put aside, its equipment rather than cut
pricing if demand falls in the near term.  
    Service providers have also signaled a recovery in rig count
and fracking activity later this year, citing an uptick in oil
and gas prices.  
    Diamondback Energy reported quarterly earnings below Wall
Street estimates for second-quarter profit on Monday, as gas
prices took a hit from easing supply concerns. Shares of the
company were down 0.3% at $146.85 in early trading. 

 (Reporting by Arathy Somasekhar in Houston
Editing by Mark Potter)
 ((arathy.s@thomsonreuters.com; +1 832 610 7346; Twitter:
@ArathySom;))