Boom and bust cycles of the oil market create challenges and opportunities for oilfield service companies. Knowing how to survive and thrive in the oil industry takes experience and knowledge.
Oilfield contractors and suppliers can handle the ups and downs with careful planning and discipline in their operations. Here are some strategies to follow which can help in building a solid foundation for oilfield services companies.
Having access to the most current information is core to the success of any business. Oilfield contractors and suppliers must stay current on oil prices, drilling activity, and industry trends. All of these are indicators of the state of the industry. Resources such as the Energy Information Agency, S&P Platts RigData, and North American Shale Magazine are excellent resources to bookmark. For a compilation of industry news and activities, visit and bookmark tcicapital.com/oilfield-news.
Cultivating relationships with key exploration and drilling companies in your area crucial. Knowing who the boss is in the area, makes a big difference for contractors looking for work. Once a company is on the job, it becomes an ongoing audition. When working for a drilling contractor or operator for the first time, be sure to thoroughly read your MSA and follow the rules set by it. For more insight on sourcing work, read this article about new opportunities in the oilfield.
Because of the fluctuation of the oil marketing and drilling activity, managing equipment is a major undertaking. In boom times, with contracts in hand, purchasing new equipment may be the right choice. One resource of good equipment for sale is Oiltizer. When work slows down and equipment needs updating, leasing may be the answer. This article provides insight into the pros and cons of buying versus leasing.
Having good information, contacts, and equipment is necessary for building success. Having cash flow available to meet payroll, manage equipment and inventory, or to start a new opportunity is a must. In the oil industry, it’s common to wait 30 days, 60 days, or even longer for payments from customers.
Some companies use bank financing for their funding needs. This involves lengthy application and approval processes and routine financial reporting to the lender. Other companies use invoice factoring as the source of cash flow. Factoring supplies immediate cash for open invoices, and top factoring companies provide numerous value-added services which benefit the daily operations of a company.
Navigating a continually fluctuating market—and staying profitable along the way—is never easy. Oilfield service companies know this fact better than most. However, by being smart about your business planning and putting foundations for success in place, you will be able to build your business to a sustainable, profitable operation.
Scale Funding is a leading provider of invoice factoring to oilfield service companies in the United States and Canada. Scale Funding offers customized factoring programs, to fit the specific needs and situations of each company. For a free, no-obligation factoring consultation and rate quote, complete the web form, or call 800-707-4845.