The Oilfield Equipment Market
In North Dakota, a used Caterpillar Oil swabbing rig which would cost over $500,000 new was sold for $27,500 (a 95% discount) in just 51 seconds during a live online auction for oilfield equipment in early June.
Working rigs have dropped from nearly 800 a year ago to below 300 in June due to the rout in oil prices, leaving a plethora of equipment sitting idle. “The auction market is more active than at any point since the downturn of the 1980s” said Dan Kruse, founder of Superior Energy Auctions. James West, Senior Managing Direct at Evercore was also quoted saying “we’ll need fewer coil tubing units, fewer well service rigs, fewer trucks, sandmines, everything”.
Apart from live auctions, companies are deploying a few different methods to capitalize on the surplus of equipment on the market today. For instance, companies like Fuelled, Inc have taken an approach similar to Amazon, placing ID tags and prices on oilfield equipment before advertising them in an online marketplace. Other firms like Ironstream LLC provide a full spectrum of solutions, from competitive sourcing to refurbishment to logistics and transport of used oilfield surface equipment.
It will be interesting to see how this market evolves, particularly in a sustained low commodity price environment.