Lone Tree Remote Camps thrives on providing mobile hotels in out-of-the-way places
Little did Richard Nuffer know that a guided elk hunt in the Utah mountains would morph into a fast-growing international business.
But in five years, Lone Tree Remote Camps LLC has done just that by providing the equivalent of mobile hotels for crews who work in exploration and production at out-of-the-way locations for the oil, gas and mining industries. Nuffer, one of Lone Tree’s founders, expects 2011 revenues to hit $8 million, compared with just $150,000 in 2005, its first year of operation.
“I’m a Utah country boy who loves to hunt and fish,” he says.
But, Nuffer is also a guy who recognizes a business opportunity when he sees one.
Hunting for a Business
Nuffer, 29, has done a variety of things since graduating from the University of Utah with a business management degree. He’s sold insurance, built and sold a courier delivery service and designed his own home. For a time, he worked as a guide with Lone Tree Outfitters, a service operated by John Hiskey that takes hunting parties on horseback into rough terrain in search of big game.
When Nuffer and Hiskey took a group of energy company executives on a hunt, the execs were so impressed by their service and accommodations they asked if the guides would be interested in providing food and housing services for energy exploration crews located far from civilization.
The first worker camp, created for a 30-member seismic exploration crew in the Utah mountains, lasted two months in 2005. Nuffer recalls that the geologists and other personnel stayed in large tents heated by wood-burning stoves. The arrangement worked fine until the winter weather started to arrive.
“They told us ‘Your services are great, but you need to do something about the weather.’ That’s when I looked into skid (modular) housing,” Nuffer says.
To replace the tents, he acquired Advanced Camp Structures International (ACSI) modular housing units. The units, measuring 13 feet by 53 feet, can be configured into housing, kitchen/dining, recreation and office uses. The structures, mounted on skids, are trucked to the camp locations where they become a temporary village of sorts.
Nuffer took over the remote camp business when Hiskey decided he’d rather continue to concentrate on the guide service. Nuffer knew he needed expertise and access to capital if the business were to grow. For expertise, he went to Jamis O’Brien, a friend who was in the construction business.
“A lot of components in the camps – running water, electricity, sewer and so on – are things you deal with in construction. That’s why I wanted to pull Jamis in,” he says.
It happened that O’Brien had built a home for a business executive who relocated to Utah after several years in the computer industry and venture capital management in California. The two approached the venture capitalist with the remote camps idea.
“He loved the concept and wanted to get involved,” says Nuffer. “He asked us to set some goals. He’s very savvy in business knowledge and has been a terrific mentor for us.”
The partners established Lone Tree Remote Camps LLC in 2007. Nuffer is involved with sales and business development; O’Brien oversees operations; and the investor is involved with financing.
Trailers now supplement the skid units giving Lone Tree greater flexibility, particularly on shorter-term projects. Working with manufacturer Forest River Inc., Nuffer designed trailers with floor plans for housing, a portable kitchen, dining hall, recreation center and office.
Contracts for the camps range from 30 days to three years. A camp that accommodates 30 workers requires two staff members – a chef and a camp manager who work a rotation of two weeks on followed by a week off. The chef is responsible for all meal preparation using food supplied by Sysco Corp. The camp manager handles all operations and maintenance duties, such as cleaning rooms and keeping the camp’s generator running.
Larger camps may have specific cleaning and maintenance personnel, a sous chef and additional kitchen help.
The camps are largely self-contained. Generators produce electricity and potable water is brought in by contractors. Contractors also haul the camps’ solid waste. Depending upon the location, the camps may hook into public sewer lines or mobile wastewater treatment equipment may be used.
Workers are housed in compact, single-bedroom apartments arranged three per unit. They take their meals from a portable kitchen and attached dining hall. A recreation center is equipped with couches, a flat screen TV, Nintendo video games, a pool table, ping-pong table and weight room. “It’s a place to relax and put up your feet,” Nuffer says.
Camps that serve oilrigs operate around the clock just like the drilling or production crews who live there. The camps supporting exploration crews serve two 12-hour shifts a day.
“These guys eat well,” Nuffer says. At 24-hour camps, the kitchens turn out four meals a day – a hot breakfast, sack lunches for the field/hot lunch for base camp, dinner with a choice of two entrees and the sack lunch repeated at midnight. Snacks, including cookies and fruit, are available around the clock.
Most camps are relatively accessible, but in some cases, rough terrain requires the kitchen staff to take a four-wheel-drive vehicle to meet the food supply truck.
Lone Tree clients are billed weekly on a per-capita rate, which is based on the level of services provided, such as laundry, meals and communications.
Nuffer says the company invests about $650,000 to equip a camp that houses 24 people. He notes that the nature of the oil and gas industry provides the potential for long-term, repeat business.
“Our clients are very, very broad. Once we establish an operation and relationships, there’s an excellent opportunity to stay for a long time,” he says.
For example, an energy exploration firm developing an oil and gas field in Pennsylvania hires Lone Tree to feed and house a seismic crew. Then a few months later, a drilling contractor contracts with Lone Tree for the same services while an oil or gas well is drilled in the same area. Finally, an energy producer, like Exxon Mobil Corp., will look to Lone Tree to support its crews.
“I’m on the road a lot,” Nuffer says. “We’re like the old-time prospectors out there following the play.”
Timing Is Everything
Nuffer believes that the timing was perfect for Lone Tree to enter the support services business.
“Oil and gas is coming out of a slow cycle,” he says. “Historically, the industry runs in almost perfect seven-year cycles – six (years) up and one down. We anticipate an upturn to last at least five years if not longer.”
Nuffer is encouraged by advances in technology that have made long-term oil and gas development possible in North Dakota’s Bakken Formation and the Marcellus Formation in Pennsylvania. Lone Tree camps currently support exploration in both locations. A 40-worker camp and a 24-worker camp are operating in Pennsylvania and a 20-worker camp is in operation in North Dakota.
Within a few months, Lone Tree will have a 180-worker camp and a 120-worker camp in Pennsylvania plus a 150-worker camp and a 40-worker camp in North Dakota and an 80-worker camp in New Mexico.
Even greater prospects lie in South America where, in some countries, government control of energy and minerals development has given way to the private sector. As a result, a 1,600-worker camp is planned in Colombia for oil and gas production. In Chile and Peru, meanwhile, exploration has opened up for copper and other minerals. A 2,000-worker camp is planned for a 2011 opening in Chile and a 500-worker camp is being developed for next year in Peru.
Those large-scale projects put Lone Tree on track to achieve a net value of $100 million within seven to eight years, Nuffer says. Further developments are in the works in Mexico and Venezuela and Nuffer won’t rule out expanding to countries in Europe and Africa.
Equipment and Logistics
Lone Tree currently has trailers from Forest River and skid units from ACSI. The company-leased generators are MQ Power WhisperWatt models supplied by Multiquip, Inc. Staging yards for the company’s U.S. camps are maintained in Utah, California, North Dakota and Pennsylvania.
The company has developed a mobile wastewater treatment plant that uses a proprietary filtration system. The treated wastewater may be reused for fire suppression, dust control, to flush toilets or in the well drilling process. A Lone Tree division, Wastewater Treatment Technologies, was created in 2009 to produce the mobile treatment plants.
O’Brien handles the permitting process with state and local agencies before a camp is established. The company uses John Deere and Caterpillar excavation equipment to prepare the site before the equipment arrives. Outside contractors are hired for site preparation as needed.
Lone Tree generally uses 1-ton Dodge Ram pickups to haul the trailers and hires outside companies to place skid units at camps. Godfrey Trucking, a Utah-based carrier, is hired for moves of large quantities of equipment.
Nuffer says additional trailers are now being produced for the South American projects. Those units will be shipped by a freight forwarder whose work includes transporting equipment for the global energy industry.
While much of Lone Tree’s business has developed through word of mouth and a website (www.lonetreecamps.com), Nuffer frequently attends conferences sponsored by the American Association of Petroleum Geologists and the Northwest Mining Association to build relationships with decision makers.
A Rosy Outlook
“It’s been a wild ride with lots of things happening at once,” says Nuffer. With adequate capital available to the company, the growth curve is expected to continue. “Right now, we don’t even have 1 percent of the market,” he says. “If we hit 5 percent of the potential market, we’ll be very, very happy.”