Eco-Stim Energy Solutions Signs Contract To Expand Operations into Oklahoma


Oil and Gas - Jan 27, 2017

Eco-Stim Energy Solutions, Inc. announced today that the Company has executed a one-year contract, with an option for a second year, with a well-capitalized and established US exploration and production company ("the Customer") to expand its pressure pumping operations into one of the fastest growing and most active oil and gas regions in Oklahoma. The Company expects that the work to be performed under this contract should provide a solid entry into this region, with the option to grow and allow the Company to generate positive cash flow with attractive returns.

The Customer is currently planning to utilize an EcoStim well stimulation fleet to complete roughly two wells per month, and should a second rig be deployed later this year, the number of wells will increase accordingly. Each well is expected to be completed with between 17 and 20 stages, which would require approximately 40,000 HHP. Currently, EcoStim owns approximately 77,000 HHP, with 32,000 HHP in Argentina and approximately 45,000 HHP in the United States. Management believes the Company has multiple options to secure any additional equipment needed to execute the work required under this contract.


This well stimulation fleet will utilize a combination of conventional diesel powered pumping units and the Company's innovative turbine powered units ("TPU") which have operated reliably in Argentina. The Company believes it has a competitive advantage with TPU's in the United States primarily because the TPU's offer our customers reduced manpower and lower field operating costs. In addition, the TPU's can run on natural gas, compressed natural gas or liquefied natural gas, allowing for the selection of the most cost effective fuel option. Furthermore, the emissions emitted from this type of equipment are significantly below the EPA's Tier 4 requirements making them one of the most efficient and cleanest running systems in the industry.

J. Chris Boswell, EcoStim's President and Chief Executive Officer commented, "We have said for some time that we would not enter the U.S. pressure pumping market without some type of technology advantage, a contract and better market conditions. We now believe we have met these criteria and while the work contemplated under this contract is not expected to be executed solely with the TPU technology, we will utilize this equipment as part of the service offering. In addition, we believe that this region is poised for significant growth and this contract will position the Company in an attractive region with an anchor customer."

"Since we expect the work in the US to commence early in Q2 2017, we will utilize the TPU's and other support equipment located in our Houston facilities. The ultimate amount of investment needed, if any, to support this contract will largely depend on the outcome of several outstanding bids in Argentina. The labor negotiations and the recent agreement reached in Argentina were important milestones; however, those negotiations delayed the award of several contracts from 2016 to 2017. We remain optimistic that the Company's bids are competitive and believe that the delayed contract awards will be decided soon".

Bobby Chapman, the Company's Chief Operations Officer commented, "We are excited to deploy advanced, environmentally efficient and cost effective pumping technology here in the North American market. We plan to build our operation here carefully just as we have in Argentina, with a high degree of competence. We believe this region of Oklahoma offers us the ability to demonstrate the cost savings associated with turbine powered equipment including the ability to run the operation on field gas. We have discussed this technology advantage with many potential customers in the region and most find the service offering very compelling."

Source : Eco-Stim Energy Solutions, Inc.

Published on Global Energy World: Jan 27, 2017

 
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