3 Best Practices Every Oilfield Services Company Should Follow09/08/2015
Though the service and supply sector has taken a hit in recent months, there are still plenty of opportunities to be had
Down but not out.
Those are the words that I feel best capture the current state of the oil and gas industry’s service and supply sector.
- Over the past year, supply-and-demand forces have worked to slice the price of West Texas Intermediate oil in half, the rig count has shrunk by more than 1,000, and nearly 60,000 jobs have been lost.
But not out …
- More than 3,300 drilling permits were submitted and approved in July, and some industry soothsayers foresee the price of oil bouncing back to $90 by 2020 or even sooner.
Bottom line: Operators are still permitting and rigs are still running; service and supply organizations just need to be extra smart about what activity they decide to pursue in these lean times.
Which brings me to the three best practices that my colleagues and I believe all oilfield service companies should follow, whether the price of oil is $9 a barrel or $99 a barrel. Let’s take a look …
Asking and answering these three questions – What do I sell? Where do I sell? and When in the drilling process do I need to get involved to improve my chances of winning business? – pays huge dividends for oilfield service companies. As mentioned earlier, thousands of new drilling permits enter the oil and gas equation every month. You don’t want to spend precious time and money analyzing all of them, do you? Focus on what you do and forget about the rest. You’ll spend a lot less money on headache medicine, too.
If you rely solely on what your contacts tell you and what you hear from others, you may be missing out on key business opportunities. Perhaps you’re working on 12 of an operator’s wells but didn’t know there were a dozen others. Or maybe there’s an operator in your area of operation that you didn’t even know about. Having accurate, up-to-date operator data at your fingertips helps you stay ahead of the curve and win critical revenue opportunities.
This one may seem obvious, but it doesn’t get the attention it deserves often enough. The key here is to train your employees to make the transportation analysis part of the bidding process and the contractor accounting review afterward. During the bidding process, you don’t want to overestimate and lose business to a competitor or underestimate and see those transportation costs take a major bite out of your profit margins. Likewise, during the review process, you want to be able to hold your transportation contractors accountable and take the right steps if there are any discrepancies between the numbers.
Again, even in today’s down market, there are still plenty of service and supply opportunities out there to be had.
Following these best practices will only help you make the most of them.
About The Author
Jeff Truscott is a Tobin Insight Product Specialist at P2. His work in oil and gas has put him on the software development and sales sides of the business. A graduate of Texas State University, Jeff has many interests outside of work, including cycling, snowboarding, cooking, tailgating, and travelling to watch his Texas State Bobcats play football. Before joining the world of oil and gas, he spent time in IT management services, telecommunications consulting, and custom-printed circuit board design and assembly. On top of his day job, he spent five years as the head lacrosse coach at Westlake High School in Austin, TX, turning what once was a 17-member team into a 70-member, three-team program.