Quarterly Industry Watch
Every day, Orissa Software’s remote camp management tools transact, process, and report on hundreds of thousands of accommodation, food service, and guest management activities, from meals scans to reservations to room status changes, and more.
This volume of data, along with our 15-year operating history and more installations in North American energy exploration zones than all other solutions combined, gives us unparalleled insight into the remote workforce housing industry.
Each quarter, we assemble and analyze this data, creating a resource of comparative metrics and observations that are unique in the workforce accommodation industry.
About The Data
91 calendar days in CampWare™
Average Camp Capacity:
Over 1,000 beds
April 1, 2017 to June 30, 2017
Alberta Oilsands, U.S. Fracturing, Western Canada, Other U.S.A.
Over last quarter, the only notable observation in this quarter’s activity seems to have been the rise in activity in U.S. Fracturing. Texas and Oklahoma continue to lead in drilling activity accounting for more than 50% of active rigs in the U.S., a number which, itself, has doubled in Q2 over Q1. While the Alberta Oilsands has settled into operations over exploration, and LNG activity worldwide continues to lower prices with increased supply thus making LNG mega-projects less attractive in Canada, it now seems that conventional oil and gas has adapted to the new order and that camp operations have adjusted as much as required.
A possible early indicator of yet another step adjustment may be signalled by the increase in the number of hours a room is left uncleaned, post check-out. With the jump to 30 days in Western Canada, we may see a further shakeout in the number of off-market rooms in this region next quarter. Otherwise, we would expect Q3 to show very little change over Q2 given summer holidays, and a wait-and-see approach in response to the political climates in the U.S. and Western Canada.
More than doubling from 19% to over 50% since the prior quarter, the U.S. Fracturing region occupancy rate clearly stood out in Q2 2017. With WTI prices consistently over USD45 since the beginning of the year and rig count steadily increasing in the shale regions, reflecting a push to self-reliance, a recovery in occupancy was perhaps not unexpected, although not to this level, nor at this speed. With larger operations in the Alberta Oilsands remaining level, continued strength in Texas and Oklahoma, and little change in an anchor project in Western Canada, the balance of the metrics remained close to prior quarter levels.
Accompanying the step change in the U.S. Fracturing region occupancy rate was a relatively strong uptick in the average length of stay, approaching ten days for the first time since Q1 2016. The Alberta Oilsands showed an even more significant increase in stay length, driven by a surge of new hires at one of the larger operations captured in the Alberta sample. Notably, all regions posted longer to considerably longer average stays year-over-year – also an uncommon occurrence over the last twelve months but reflecting a new steady-state of operating activity now that the declining rate in WTI prices seems to have stabilized.
Coming off a weak first quarter which showed the lowest booking levels since the Q1 2015 inception of this report, Q2 reservations rebounded 15% to approach the 50,000 mark. While we are aware of 20-30% declines in reservation activity in select operations, we can attribute the recovery to, again, regional strength in the U.S. Fracturing sample more than offsetting the declines, as well as to significant reservation volume originating from a small number of larger camps.
Perhaps a consequence of the aforementioned surge in new hires captured in the Alberta Oilsands sample, the proportion of Standard rooms booked increased from 48% to nearly 55% quarter-over-quarter, almost entirely at the expense of Executive class bookings. Having observed the range of Standard room reservations from its low last year at 38% to as high as 78% in early 2016, we suspect the observed Q2 2017 breakdown to be the norm into 2018.
Short term reservations declined from the majority (51%) of bookings in Q1 2017 to approximately 46% this quarter, but remained well above the two-year historical average of 33%. As in prior quarters, bookings made with 48 hours’ notice or less were the bulk of short term activity, suggesting a continuation of labour needs and work requirements being addressed in the absence of medium-term forecasting.
Following what we believe is continued enforcement of short-notice cancellation penalties and practices and the increases in occupancy noted this quarter, cancellations within 72 hours were observed at just 1.7% this quarter, having fallen from 4% and higher for much of 2016. With the tightened availability of work, we would expect to see contractors more eager to honour their reservation commitments and less pressed to spread resources over multiple, resource-competing projects.
Largely unchanged quarter-over-quarter, we continue to observe that, while a significant proportion of guests make their reservations on short notice, the small minority who no-show will do so in relatively predictable volumes. This is a structural measure in the industry.
Operationally, the most significant quarter-over-change was observed in the U.S. Fracturing region where the average number of hours a room remained uncleaned fell from nearly 80 hours to 11 – a natural outcome when occupancy rates rise and opportunity costs increase. Otherwise, this metric was observed to be generally stable in the regions quarter-over-quarter, either close to prior levels or in the case of the Alberta Oilsands, higher, but remaining well under a day.
Rooms off-market declined slightly from the all-time high observed last quarter – the net of a slowed rate of asset decommissioning and closure. However, at triple the volume year-over-year, it is proof that a structural, long-term change has occurred in the industry.