Diversity proves to be important for small Wyoming oilfield services company surviving downturn in oil industry.
Currently the general manager of the company based in Rock Springs, Wyoming, Hartford plans to acquire the company sometime this summer from current owner Rod Peterson (the R.P. in the company’s name), who’s retired. In doing so, the 26-year-old Wyoming native will continue a long-standing family tradition of working in the oil and gas fields — and try to uphold the solid reputation for superior customer service that Peterson has established during the last three decades.
“My family has been in the oil industry for a long time,” says Hartford, who earned a degree in business management with a focus on small businesses and entrepreneurship in 2012 from the University of Wyoming. “Rod has been a good family friend for a long time, and when I was about 15 years old, I started working for him as a shop hand during summers. And while I was in college, I ran a roustabout crew for him during summers.”
Originally, Hartford — whose father, brother and sister all work in the oil industry in one form or another — was intent on earning a degree in civil engineering. But he switched gears when Peterson asked him to think about running the business after he retired. “He wanted someone he could trust to run the company he’d built for 30 years,” Hartford says. “I’ve been running the company ever since I graduated from college. The opportunity (to eventually own the company) was there and everything just lined up the right way.”
Why pin a career on such a volatile industry that’s prone to dramatic up-and-down cycles? “It runs in the family,” Hartford says. “And I like the challenges. It’s something different every day. I learned early on that as soon as you think you know this industry and what’s going on, it can change in a second. So if you’re not continually evolving, you’re falling behind.”
Continual evolvement explains how the company has survived for so long in a rough-and-tumble industry. Over the years, Peterson’s goal was to provide what customers needed. The result: A company that offers a full range of roustabout services that run the gamut from power washing rigs and equipment, maintaining production equipment and new well construction to wellhead site preparation, installing pit liners, erecting fencing and even painting. Roustabout services account for about 75 percent of the company’s business volume, with the balance produced by anchor and auger services for workover rigs, Hartford says.
“I attribute our service diversity to Rod,” he explains. “When he first started the business, he did whatever customers needed. That meant finding guys who were skilled at things like pipe fitting, excavation, construction, fencing and painting. In short, we’ve always adapted to what our customers need. And over time, we’ve built up an inventory of skills and knowledge that allow us to meet our goal of being a preferred service company in the oilfields.”
Diversity provides many advantages. First of all, most customers prefer one-stop shopping to dealing with multiple contractors, which makes job scheduling and invoicing more complicated. “The more streamlined you can make things for customers, the better,” Hartford notes. In addition, offering a larger array of services can help offset the industry’s cyclical ups and downs by avoiding reliance on one primary revenue stream.
“But you have to be careful — there’s usually a limit to what you can offer,” Hartford warns. “You want to offer a broad range of services, but you also want to perform them competently and efficiently. If you get too big and offer too many services, the quality of work can suffer, especially if you don’t have a lot of expertise developed in those new areas.”
The solution? Stick with what you know, he suggests. It’s better to expand by offering complementary services that can leverage employees’ existing skills and the current equipment (which minimizes the need for debt-enhancing capital goods purchases), as well as the existing customer base, Hartford explains.
WEATHERING THE STORM
How has R.P. Oilfield survived during downturns like the current industry slump? By keeping close tabs on costs and avoiding fast, exponential growth. Hartford says oilfield companies that grow too big too fast run the risk of running up debt that cripples operations when a downturn hits. The company has managed to cushion the effects of downturns by growing slowly and steadily and keeping payments on equipment as low as possible.
“That’s what has allowed us to survive the ups and downs,” he says. “This industry is subject to such volatile price swings. When times are good, that million-dollar piece of equipment you bought seems like a great investment. But then a downturn comes along and you can’t make the payments on it. You have to ensure that there’s reliable demand before you invest in new equipment.”
Providing great customer service is also important, which means it’s critical to properly train employees to do jobs right. And that’s not easy to do when times are good and companies have to hire more employees quickly to meet rising demand for services. “But if they’re not properly trained and they have no real commitment to your business, the quality of work suffers,” he notes. “Then your reputation suffers, too, and in the oilfields, your reputation is a big thing.”
Sheer longevity helps, too. When a company like R.P. Oilfield has been well established for decades, customers have faith that they can rely on it through booms and busts, as opposed to companies that fail the first time they encounter a downturn.
In the end, it all comes back to building personal relationships with customers. Hartford says part of building up that trust includes helping customers out even if it doesn’t benefit R.P. Oilfield financially. “If customers call us for a service that we don’t or can’t provide, I don’t say, ‘Oh, too bad — you’re out of luck,’” he explains. “I tell them not to worry — I’ll take care of it by finding someone else who can do it. That’s a true definition of customer service because I’m not getting anything out of it — someone else is making the money now. But the customer knows that we have their best interests in mind.”
During downturns, most employees work fewer hours (perhaps 30 a week instead of 60, for example) and some leave to take other full-time jobs. The company also scrutinizes spending even more than usual and carefully considers whether a new equipment purchase is a “want” or a “need” that allows employees to provide better service. Moreover, the company will hang onto equipment longer than originally planned; instead of selling a truck when it hits 100,000 miles, for example, the company might keep it until it reaches 150,000 miles, Hartford says.
“We try to stretch every dollar during downturns,” he points out. “And even when times are good, you still have to spend conservatively because you’ll need the surplus when business is slow.”
Over the decades, R.P. Oilfield has invested in a wide array of equipment in order to serve customers efficiently. That includes an auger truck built by Highway Manufacturing and five backhoes, one skid-steer, one forklift and one telehandler, all manufactured by Caterpillar; they’re used for jobs such as running dump lines, site preparation and emergency spill response.
The company also owns a trailer-mounted pressure washer made by Landa. It features a pump that generates 3,500 psi at 4.7 gpm, a 500-gallon water tank and hot water/steam capability. “When you’re cleaning rigs and trying to cut through setup oil and grease, hot water and steam come in handy,” Hartford says.
In addition, the company owns eight 1-ton Ford roustabout trucks, a 2-ton winch truck, Honda generators, a DEWALT air compressor and four trailers: two gooseneck models made by Dell Rapids Custom Trailers (DCT) and a float trailer and tilt-bed trailer made by Delta Manufacturing. Four Ford F-250 pickup trucks round out the equipment fleet. Employees use them to fulfill contracts the company signs with oil companies to go out to wells and check whether equipment is functioning properly, as well as perform small maintenance chores and measure how much gas, oil and water the well is producing. “Part of their job is to optimize the wells — make sure they produce as much oil and gas as they realistically can,” Hartford explains.
Hartford is always prepared to modify/fabricate equipment to meet customer needs. A good recent example centers on the company’s auger truck. A customer asked Hartford if there was a way to more cost-effectively get soil samples from old, backfilled water and fire pits at wellhead sites. If tests show the soil is not contaminated, the pits can be officially abandoned, which means the oil company is no longer responsible for maintaining the site. The customer was trying to avoid the expense of bringing in heavy excavating equipment to obtain soil samples from 12 feet underground (regulations mandate the depth).
The solution? Hartford fabricated a piece of hollow, 2-inch-diameter pipe and outfitted it with cutting teeth, then adapted it to fit on the end of an auger bit. “So after I auger down and get an open hole that’s 10 feet deep, I then attach a sample tube and auger down an additional 3 feet to get a good sample. Then the company sends it off to a lab to test it.
“This saves the customer from paying someone to come in with a lot of heavy equipment, get samples and then cover it all back up,” he says. “We can get the samples without removing a lot of dirt. We can do in one day what might take five or six days, using heavy equipment.”
In the long run, this new technique could generate more work from other customers who also seek a cost-effective way to obtain soil samples. As Hartford says, “It’s just another example of how we adapt and figure out — especially during these slow times — what additional services we can offer to keep customers happy.”