Working in the oil business is not for everyone. Is there potential for big money? Yes, but not every start-up or even established business will survive the cyclical nature of the industry. There are certainly some things that you can do to survive the valleys. I had the pleasure of speaking with John from G&C Construction on this topic, along with many others as well.
G&C opened their doors back in 2009, initially focusing on the construction side of the oilfield business. When talking with John, he said: “The oil well doesn’t know if it is day or night, so it will always be producing wastewater and water is a part of every cycle of the fracturing process”. G&C saw an opportunity and moved their focus to water hauling. With water being part of every step of the process, they were able to put part of their fleet on the 24/7 before production regime and part of their equipment in the after production segment, which is on more of a schedule.
When asked how they survived the crash in 2014, John responded: “with the grace of God”. Although there was probably some truth in that when we spoke he talked about different things they did to survive. He talked about chasing the work, or in other words, paying attention to different areas and where the needs were. There were many times, where they would be shifting their trucks and other assets to different areas. “Do whatever you can to keep your trucks running. Even if you are not making a profit, keeping your trucks running will help with incoming bills, truck notes, payroll, etc. that may keep your company alive.”
They also tried to differentiate themselves from the other service providers in the area by having two shifts. A majority of the companies would only be running one shift, as admittedly it can very tough on equipment and at times the personnel. By having two shifts they were able to go above and beyond in fulfilling their customer’s needs.
To paraphrase what John has stated above, to grow your business or survive the ups and downs of the oilfield, you need to continually adapt to your surroundings. Ask yourself if you are currently in an area where there is a need of your services. Are there other surrounding areas that may be better suited? You must be willing to accept change, move your operations and equipment. Keep in mind, what was working last year or even the prior month may not be what will work the next.
For the smaller and mid-size companies that are looking for growth, one of John’s comments stood out to me. “Bigger is not always better. You have to find the right balance”. Yes, in theory adding additional equipment will be able to provide you more revenue. But if you add too much, too quickly and the industry ends up being in a downturn cycle, you could have a bunch of trucks in the yard, with not enough work for them to pay the bills.
All in all, do you have to have some luck? Yes, but there are things that you can do as an oilfield service provider to create luck and survive the cyclical nature of the industry. Diversifying, building relationships, and finding where your services are needed all help build a successful business. Hopefully, this article is a refresher for companies not to become complacent, to continually be aware of their surroundings, and not delay in making the necessary changes needed to grow and survive in this business.
Author: Jade K.