Complete Production Services (NYSE:CPX) is leveraged to the growth of oil and gas drilling activity in the United States and is adding capacity in various service lines to benefit from the expected increase in activity over the next year.

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Summary
Complete Production Services provides a number of services that are used during the drilling and completion of oil and natural gas wells. The company's largest oil service line is pressure pumping, which provided 30% of revenue in the first quarter of 2011. This was followed by fluid handling at 21%, and well servicing and coiled tubing at 12% and 11% of revenues, respectively.

Complete Production Services has allocated $350 million in capital in 2011 to add capacity to a number of the company's most important oil service lines. The company plans to spend $190 million in the pressure pumping and coiled tubing areas and $105 million to the fluid services and well servicing areas.

Pressure Pumping
Complete Production Services operates 13 pressure pumping fleets with 310,500 hydraulic horse power (HHP). These fleets are used during the hydraulic fracturing process on wells that have low permeability. These units are working in various unconventional resource plays in the United States, including the Bakken, Barnett, Marcellus and Eagle Ford Shale. (For more, see Other Shale Plays To Watch In 2011.)

Complete Production Services plans to add another 180,000 HHP to its fleet over the next three quarters and end the year with 490,500 HHP.

Fluid Services
Fluid services involve the transportation, storage and disposal of fluids used during the drilling and completion of wells. This type of service has increased in importance as operators have become more sensitive to the environmental concerns associated with hydraulic fracturing.

Coiled Tubing
Coiled tubing is placed into the wellbore and used to perform a variety of well intervention services that are designed to improve the performance of the well and reservoir.

Complete Production Services has 57 units in the company's coiled tubing fleet, with 30 located in the United States. The units most in demand by the industry are the ones that can conduct large diameter and extended reach operations.

Complete Production Services is adding five of these coiled tubing units in 2011 and estimates that the company has a 10% market share in the United States and Mexico.

The Intervention and Coiled Tubing Association (ICTA) estimates that there were 494 coiled tubing units operating in the United States as of January 11. The ICTA said 85 additional units will be added to that count in 2011.

Other oil service companies that are involved in the coiled tubing business include Schlumberger (NYSE:SLB), Baker Hughes (NYSE:BHI), and Halliburton (NYSE:HAL). These three companies operate 137 units or 28% of the U.S. fleet.

Well Servicing
Complete Production Services estimates that it has an 9% market share of the well servicing business in the United States. These units perform completion, workover and maintenance services on existing wells.

The Bottom Line
Complete Production Services is betting that oil and gas drilling activity in the United States will continue to increase over the next year and is adding capacity to take advantage of that growth. (For more, see 5 Stock Sectors To Hold If The Market Crashes.)

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