The Industrial CapitalistWalk onto a pad and most of the people you meet do not work for the company that owns the well. They work for service companies, which do the drilling, completion, testing, trucking, and maintenance, and for rental companies, which supply the equipment those jobs need. Together they are the largest employer in the industry and the place where most of its businesses are built.
Service companies
A service company sells a job: drill this well, frac these stages, test this line, purge this vessel, haul this load. It brings its own crews and equipment and is paid by the day, the stage, the foot, the mile, or the job. Its costs are people, iron, fuel, and insurance. Its advantage is doing the work well, safely, and on time, and being the company the operator’s representative calls first.
Rental companies
A rental company sells time on equipment: pumps, generators, light towers, tanks, compressors, nitrogen units, test equipment, pipe, and the thousand things a job needs for a week or a year. It is paid by the day or the month. Its costs are the capital in the fleet, maintenance, and the yard and trucks that move it. Its advantage is availability, condition, and the ability to be on location tomorrow.
What it takes to build one
- The first machine. Almost every company in this business began with one piece of iron, bought with a personal guarantee.
- The first customer. A relationship that trusted the founder before there was a company to trust.
- Payroll. Making it, on time, through the first downturn, is what turns a contractor into an employer.
- The moment it outgrows the founder. When the owner is no longer the best operator in the yard, the company either becomes a business or stalls. We call that moment truck three.
These are the businesses The Industrial Capitalist exists to chronicle. If you built one, tell us about it.