Frac sand is an essential part of the drilling process because it’s high quality, cost-effective, and an easily available proppant. In 2014, the U.S. oil and gas upstream sector used 61.5 million tons of frac sand. With drilling activity on the rise again, oilfield analysts anticipate a boom in the demand of frac sand in 2018. It is expected to be higher than its historical peaks.
What does this mean for oilfield service companies? The demand for frac sand haulers is on the rise.
The high capital-intensive nature of the oilfield industry can slow down your growth if you plan to purchase all required equipment. Trucks and sand trailers have hefty price tags. Nowadays, you can expand your fleet by joining a good truck-leasing program. The monthly installments offered by truck-leasing programs cater towards maintenance. If you’ve been in the oilfield industry for a while, you understand how costly it is to incur truck repair expenses. In addition, the trucks come pre-installed with a GPS system to help you keep track of all drivers.
The oil and gas industry is unpredictable and ever-changing. Demand can rise and fall quickly. Having a steady cash flow is essential so that you can keep up with the demands of your business. While it is common to wait 30, 60 or even 90 days for customer payment while working in the oilfield, invoice factoring, also known as oilfield factoring, allows you to get paid same day on your invoices. With invoice factoring, the amount of working capital you obtain is directly related to how much work you do. If demand goes up, and you have more contracts to fulfill, the amount of working capital you receive from a factoring company also goes up. You’ll have the cash on hand to rent or purchase more equipment, hire more drivers, fuel your trucks, and more.
Some states have a persistent shortage of frac sand haulers. To cope with this situation, large sand haulers subcontract work to smaller companies to still take advantage of the increased demand.
You need abundant fuel in order to transport frac sand to the drilling site. Fuel is a costly recurrent expense that is also unpredictable. Fuel card programs that offer discounts can help lower your costs. TCI Business Capital offers a fuel card by Fleet Tech that is accepted at more than 5,000 truck stops throughout the United States and Canada.
Since 1994, frac sand haulers have used invoice factoring with TCI Business Capital in order to take advantage of the increasing demand. If you’d like more information on invoice factoring or our fuel card program, contact us today at (800) 707-4845.