Refracking, the practice of fracking existing wells, can be a cost saving investment for oil producers. Halliburton is now partnering up with BlackRock, which invest $500 million in refracking projects during the next three years.
As drilling accounts for more about 40 percent of the costs of a new well, Reuters says, oil producers hesitate to start exploiting new wells and aim to enhance the output of existing ones. Refracking, pumping fluids and proppant into an existing wells, can help to improve productivity and revive output of established wells.
"Though a relatively small market today, we see significant runway for refrac in the future," Halliburton President Jeffrey Miller said on a post-earnings call on Monday. According to Shale Gas International, an IHS study from early July has claimed that horizontal well refracturing technologies will likely remain a niche market in the U.S. until significant technical and financial risks can be reduced. “What refracturing needs now is a new innovator to step up, invest capital, and take risks to refine the technologies and lower costs,” said Christopher Robart, managing director of unconventional resources at IHS Energy, at the time. The funding could help Halliburton speed up adoption of refracking, Edward Jones analyst Rob Desai said on Reuters.
By partnering with BlackRock, Halliburton is, accordging to Miller, allowed “to focus on candidate selection, execution and generating best-in-class returns while allowing BlackRock to pursue innovative opportunities with their clients.” Halliburton is looking for revenues and margins, while BlackRock is "looking for an income tail that goes out a number of years," says Dave Lesar, CEO of Halliburton.