Purchase or Rent Your Oilfield Equipment

September 1, 2016

Oilfield equipment is one of the largest investments an oilfield service company makes. Determining whether to purchase or rent your oilfield equipment is a big decision. There are many advantages to both renting and purchasing. Depending on your current business situation and financials, one option may be more beneficial than the other.

Advantages & Disadvantages of Purchasing Oilfield Equipment

Advantages of Purchasing Your Oilfield Equipment

• This might be obvious, but the biggest advantage of owning your oilfield equipment is that you own it and it’s an asset to your business.
• Since you own the equipment, it’s always available for you to use when you need it.
• If you’re going to be using the equipment frequently and for a longer period of time, purchasing your oilfield equipment is cheaper in the long run.
• When and if you decide to sell your purchased equipment, you may get some return on the investment you made.
• When you own your equipment, there may be some tax advantages.

Disadvantages of Purchasing Your Oilfield Equipment

• Purchasing equipment is generally a large financial investment – especially if you want the latest and greatest models.
• Since the equipment is yours, you’ll be responsible for the maintenance and repairs.

Advantages & Disadvantages of Renting Oilfield Equipment

Advantages of Renting Your Oilfield Equipment

• The initial investment can be significantly less compared to purchasing your equipment
• Typically, when you rent equipment you can get some of the newest and most updated equipment available at a reasonable price. It’ll be dependable for completing the work you’ve agreed to do.
• You’re not responsible for the general maintenance of the equipment, which saves you money and helps avoid unplanned expenses.
• Through some rental companies, equipment is delivered right to the site where you need it.

Disadvantages of Renting Your Oilfield Equipment

• After months or even years of paying to rent the equipment, you’ll have no equity in it.
• Occasionally rental companies may not have the equipment you need when you need it. This makes it difficult to complete the job you agreed to do in the time frame you committed to.

Rent or Purchase Your Oilfield Equipment?

Many companies choose to rent some of their equipment and purchase other equipment. An article from Entrepreneur.com  states that the Equipment Leasing Association of America reported that 80 percent of U.S. companies lease some or all of their equipment.

Look at your business financials and the work that you do to see what makes the most sense financially for your oilfield service company.

If you need the cash to invest in new oilfield equipment, reach out to one of our representatives. For more than 20 years, Scale Funding has helped companies just like yours with the cash they need to both rent and purchase oilfield equipment to maintain and grow their businesses. Call (800) 707-4845.