Sue McGregor, Managing Director of Canada, IronPlanet, recently published an article in the June 20, 2016 issue of Equipment Journal, sharing her tips for building a resiliant oil and gas fleet in a down market.
Last month, the Canadian Association of Petroleum Producers (CAPP) painted a grim picture, stating that capital spending in the oil patch would plunge $50 billion, a 62% decline since 2014. It’s the largest two-year drop since 1947 when CAPP started keeping records. Encouraging, though, oil prices have inched their way back from a 12-year mid-February low. As equipment owners continue to grapple with the uncertainty, they look for every way to reduce costs, increase efficiencies and manage through the gloom. Some focus on reducing debt by selling off underutilized equipment. Others take the bold step of refreshing their fleets while some owners are making the tough decision to retire and end their business. Any way you look at it there are hard decisions to make in these trying times. As you look to achieve greater resiliency in a down market and prepare for the recovery, here are eight things to consider before you make major changes.
TECH INVESTMENT
Now may be the time to upgrade to newer, higher-tech equipment, such as a grader equipped with positioning software. Unfortunately, the lower Canadian dollar won’t do you any favours in the new equipment market. But given the abundance of late-model, low-hour iron available; you may have better luck purchasing from the thriving used oilfield equipment market.
USE THE 80/20 RULE
Machines working less than 20% of the time may be expendable, which could make way for a newer breed of iron. Older units still attract solid prices given the range of selling venues today such as consignment through your local dealer or quick-to-cash auctions that lure global interest. Make sure you look for data-driven guidance that will help determine the best channel to get the best return that also meets your timeline.
SURPRISE! SOMEONE WANTS YOUR D6D
Often, equipment that may not meet regulatory requirements in Canada can still be in high demand from buyers in the developing world. Along these lines, a recent Cat Auction Services live auction in Edmonton saw bids from South America, Europe, Southeast Asia, the Middle East, and Mexico, as well as Canada and the US.
TRAVEL THE GLOBE WITH YOUR MOUSE
That powerful tool known as the Internet provides you access to machines for sale around the world. Online auction sites like IronPlanet also give you control over the amount you want to spend. You can place a bid or select the “buy now” option at a fixed price.
MAKE SURE YOUR PURCHASE FITS “THE CULTURE”
In the Great White North’s oil and gas industry, heavy equipment such as track-type tractors are equipped with wider pads to handle swamplike conditions and to avoid potential “hotline” problems. They also come with angle tilt blades and winches, features you generally won’t find on tractors in other industries. So make sure a unit you’re interested in is up to the task.
BUY MACHINES BUILT TO LAST
In your search of the surplus market, opt for durable, re-buildable iron that has a global dealer network to back it up. Most oilfield tractors can be rebuilt at least once, while trucks are designed to give you up to four lives. Rebuild capacity reduces your long-term owning and operating costs.
GET THE WHOLE STORY, GUARANTEED
Make sure a seller stands behind equipment condition reports. IronPlanet’s IronClad Assurance lets you know that an inspector has personally visited a unit, taken pictures and conducted a comprehensive inspection of key systems and components, including fluid analysis. With their IronClad Assurance equipment condition certification that what you see in IronPlanet’s inspection report is what you get.
GO WITH THE PROS
If you elect to go the auction route, make sure you work with a team that not only understands the drilling, well-servicing and site preparation aspects of your operation, but also has a solid track record in sale support which covers logistics, customs, titles, lien dispersal, marketing and prompt settlement of sale proceeds. Canada’s oil patch moves at a slower pace these days, however there are still opportunities to increase efficiency and right size your business to not only survive but thrive. As the leader of your operation, now could be a great time to divest older equipment and explore the vast array of well-priced, late-model used equipment available in the market. Read article.
