Oilfield equipment rentals on the rise
April 23, 2017 at 11:08 p.m.
Updated April 25, 2017 at 1 a.m.
CUERO - Business started to pick up for Polly and Kirk Laging, owners of Certified Oilfield Rentals Inc., in November.
The Cuero-based business rents surface oil field equipment all over Texas including on-site offices and living quarters, water and septic systems, light plants, generators, cooling trailers, trash trailers and more.
This time last year, about 30 percent of their rental equipment was on drilling sites, and now close to 70 percent of equipment is rented.
"We're on a steady increase right now," Kirk Laging said. "It's significant compared to what it was this time last year. Our employees, they were hardly getting their hours or making any over time. This time around, the guys are happier because they're now back on making over time."
With about 80 active rigs in the Eagle Ford Shale and the price of oil per barrel steadily staying above $50, oil field service and rental companies are seeing an increase in business, said Omar Garcia, South Texas Energy and Economic Roundtable president.
Business is booming for the Lagings in the Permian Basin and is steady and increasing in the Eagle Ford Shale. It is more economically sound to drill in the Permian Basin than the Eagle Ford Shale.
"We're turning work down because we're actually having to send our personnel from here who are available to help out in the Permian Basin for short periods of time," he said.
The business was started by Kirk Laging's father in 1969, and the Lagings have rented out equipment for 28 years.
The company has more than 30 employees, up from the 20 this time last year. During the oil boom in 2013 and 2014, the company had about 60 employees.
The couple is in search of personnel to work at their yard in the Permian Basin area.
"We appreciate our loyal employees who have stuck with us through the hard times," Polly Laging said.
Rodney Hubbard, Energy Hunter Resources drilling consultant, rents oilfield surface equipment from the Lagings and manages a rig site in Runge. Business started picking up for the company a few weeks ago, he said.
"I started consulting 17 years ago," he said. "The first trailer I had on location was Certified."
Energy Hunter Resources is drilling two wells right now, one being the Runge site, and will drill several more after that, Hubbard said.
They started drilling at the site in the second week of April. Drilling time for rigs is usually about 18 days, he said.
Since the oil boom, the technology of oil field equipment is more efficient, Kirk Laging said. New and improved methods of drilling had cut the number of days down it takes to drill a well.
"It seems like the bar is being raised more and more," he said. "They're focusing on that type of efficiency with the price of oil as it is today. It's at a break-even point. If it's not break-even, they have to do it so much more efficient to be more profitable."
Oilfield equipment technology is getting ahead of its operators, Hubbard said.
"Every time the oil field slows down you lose a tremendous amount of the experienced people," he said. "They never do come back into the field and you wind up with a new hand having to learn a lot of that stuff all over."
The oil and gas industry is constantly working on new innovations and more efficient processes, Garcia said.
It is less expensive now to drill and frack a well than it was during the oil boom because of improved technology, he said.
"If it was not for horizontal drilling and fracking, we would not have had the economic success in South Texas that we have seen," he said.
When the downturn hit, the Lagings paid off capital that they owed as fast as possible, Polly Laging said. The couple always expects the unexpected with the oil industry.
"We were in good shape when the downturn came," she said. "Kirk was smart about selling off our older equipment as soon as it started to slow down. We got good prices on selling old equipment, including trucks, and were able to sell them before the market was flooded."
Right before the downturn, they also bought new equipment, which they are using now, Polly Laging said.
The Lagings were shocked when other oil field equipment rental companies that had been around a long time filed for bankruptcy and liquidated because of the downturn.
"There were quite a few companies that I had been exposed to that we had worked with," Kirk Laging said. "A few that were down in The Valley that moved to the Kenedy-Karnes City area to take advantage of the Eagle Ford activity. You'd never thought that they would be in the state of bankruptcy."
Kirk Laging predicts the oil industry will remain steady for the rest of the year. The industry goes in cycles, and he has seen a few because he's been in the business for more than 35 years.
"The key to success in being in business such as this, when times are good and money is rolling in, pay your debts off as quickly as possible," he said.
With the oil industry downturn and the recent increase in business, the Lagings have had to get their equipment ready again.
When the downturn took place, they put the equipment not being used in storage.
"When the equipment does set up, there are some capital expenditures that you have to put toward getting the equipment ready to go back out into the filed," Kirk Laging said.
During the downturn and cuts in prices, the couple did not compromise their reputation, and they continued the services at their own cost because they knew it would affect their future reputation if they slacked, Polly Laging said.
Regardless of economic cycles of the oil industry, the Lagings are passionate about their work.
"Being in this business for so long, you know it's going to have ups and downs," Polly Laging said. "When the downturns hit, you have to keep the company moral up, stay positive and ride it out. Expect that it picks back up again, and we trust in God."