Oilfield PULSE (October 2015 Issue) published arcticle by Michael Maltsev, RigER Founder and CEO about Improving Oilfield Rental Operations.
7 Ways to Boost Oilfield Rentals
What Oilfield Rental Companies Should Consider Now
Oilfield rental companies across Western Canada and USA faced with low commodity prices and low operational activity. Experienced business owners and managers know the importance of adapting quickly and act strategically.
Successful oilfield rental companies get through downturn with clear focus on two tasks: optimize financials and prepare to next phase of market cycle. First task includes cutting costs and credit checks, second – innovative products, scalable solutions, workflows improvements.
Acknowledge that downturn will correct the numbers, but it will not correct the entire trend. Rental segment of oilfield service will grow next years. We will see market consolidation and restructuration. M&A activity is growing now.
Doing nothing and waiting for recovery simply is not an option. Oilfield service business requires proactive steps to make rental operations stronger: penetrate the market by new products, research advanced technologies, develop relationships with clients, hire talents and build effective team!
Today is the Best Time to Act!
The rapid development of ICT and automation technologies brings an increasing number of automatic applications to the oilfield. Successful oilfield rental companies have a good tradition of utilizing disruptive technologies to improve operations efficiency.
It is the best time now to implement oilfield rental software like RigER (www.riger.ca). Industry downturn and low season activity bring ideal conditions for software implementation. People have time to learn and implement new technology.
Accurate and efficient invoicing system is important for oilfield rental business. Rental days counting could be very challenging when you have significant number of rental units constantly moving. Rental and service companies using paper based system or MS Excel spreadsheet to track rental equipment usually spend 10 to 30 days to prepare and send invoice to the client.
An efficient invoicing process is essential to maintaining a healthy cash flow. Smart invoicing can significantly shorten the time between when you complete field project and when you get paid for it. It can also reduce the time spent sending invoices and handling payments. No matter what your current invoice process is, you can take steps to help improve both timely payments and customer relations.
Include all necessary details (LSD, PO#, job #, AFE, etc.) on your invoices while still maintaining clarity and readability. Include your contact information, as well as that of your client, and a tracking number. List out the products or services as clearly as possible, along with unit prices, quantities, taxes, applicable discounts, and the final amount you are looking to collect. The easier it is for your client to understand your invoice, the more likely you are to get paid quicker.
Organize Critical Data
To help you increase your chances of being paid on time, it is important to know who your customers are. Oilfield Rental Software lets you organize your customers’ details from their contact details, to their rental and service history, to their invoicing and payment history. Think about your operational CRM (Customer Relationship Management). Does it categorize clients, locations, and contact information? Does it structure critical business data, including equipment and serial numbers, prices and discounts, quotes and rental agreements, etc.?
Improve Rental Fleet Utilization
Rental Units Utilisation is one of KPI (Key Performance Indicators) for rental business. Run utilization report to analyse rental fleet time and dollar utilization. Dollar utilization is an annual or annualized rental income divided by original fleet cost. At downturn, oilfield rental companies struggle with dollar utilization rates from the low 15 percent range to the mid 40 percent range. The reason is obvious. The demand is down, supply is up and rates are low. Of course, lower drilling activity and lower rates have had a tremendous effect on driving utilization down. However, doing regular utilization analysis by equipment type, locations, customers, etc. can help effectively manage rental fleet. On the other hand, low assets acquisition cost gives an opportunity to update rental fleet and improve fleet structure.
Lack of tracking damaged, or missing equipment can have a significant effect to a rental business. Track your equipment’s every move. Investing in GPS technology is probably the most effective way to protect assets and collect
data. The system tracks rental units automatically with no human input, so accuracy is very high. However, there are two things to watch out for. First, it can be an expensive investment. Second, it can require integration with your existing systems. Overall, GPS is a great solution for your big and expensive equipment.
Dispatching field service and rentals requires an advanced schedule solution. Managers need to track work orders throughout the day and update all information in real time. Field technicians should track their own schedules throughout the day, week, and month. Scheduling for rental units preventive maintenance can help extend equipment life. This automated system can also track recalls, service campaigns, and pending operations as part of the
vehicle’s service history. Thanks to the increased visibility into what’s happening with your assets, you’ll be able to bundle service events together and reduce the number needed between preventive maintenance appointments. Fewer service appointments means more time hauling freight and a higher asset utilization percentage.
With the current commodity prices, oilfield service and rental companies are seeking out new ways to increase efficiency and trim costs. Software, specifically in the field service and rental automation, is proving to be a great method for getting data quicker, streamlining rental operations, securely sharing data, eliminating waste, creating customized data forms, reporting information, and integrating with back-office systems. Integrate planning and analytics processes across your company to help get the performance insights you need to reduce operational losses and optimize asset utilization.
Build One Transparent System
A transparent management system allows business owners and managers to run their business remotely and understand who does what at any given moment. This can help your dispatchers manage rental operations and field
services easily, efficiently, and accurately.
Boost Oilfield Rentals!
Have a Great Drilling Season!
By Michael Maltsev, MBA
Founder and CEO │ RigER – Oilfield Rental Software