25 Sep Working Capital for Oilfield Service Companies
Just a few weeks ago, I traveled south on IH35 from Austin to Laredo to visit a client. As usual the highway was busy with commuters, trucks and other commercial traffic. After all, Interstate Highway 35 runs 1,568 miles from Laredo, TX to Duluth, MN, and is the most important north-south highway through Texas, connecting Dallas – Fort Worth, to Austin and of course all the communities south of San Antonio to Laredo. What caught my attention was a new type of commercial traffic also traveling south, oilfield service vehicles.
The Eagle Ford Shale Play which comprises about 30 Texas counties just south of San Antonio, has brought tremendous growth to many rural communities in South Texas. The Eagle Ford Shale is approximately 400 miles long and as wide as 200 miles, with most of the exploration activity happening in the Gonzales, Dewitt, and Karnes Counties of Texas. This oilfield related growth has also brought many new business opportunities. Sleepy little towns are building hotels, restaurants, apartments, shopping centers and roads to accommodate the oilfield service companies coming to work in the area. The business opportunities have not been limited to just the basics of food, housing and recreation for the oilfield workers. Many specialized businesses supporting the oilfield drilling companies, like tire shops, water hauling companies, machine shops, and specialized equipment and supply companies are moving into the area. Most of these small business have one big financial concern – how to get working capital to grow their business.
Business Loans for Oilfield Service Companies
Business loans are the first place many companies look for working capital, and bankers are comfortable lending to established businesses with traditional business models. However, oilfield service companies are finding they often don’t fit standard bank loaning criteria. Many oilfield service companies are start-ups, under 5 years in business, or businesses that have expanded their service offering to take advantage of the opportunities of the recent oil boom. Many oilfield service companies are highly mobile operations and follow drilling crews. Many oilfield service companies have limited equipment and assets to use as collateral. All these factors spell “risk” to traditional financing sources who are risk adverse. Finding business loans for newly formed oilfield service companies can be challenging.
Financing Options for Oilfield Service Companies
There is so much business opportunity up for grabs for those entrepreneurs that can find the working capital to have their equipment and personnel ready to work in the Shale Oil plays. There is also a lot of frustration, confusion and misinformation on available financing for non-traditional businesses like oilfield service providers. This is why Sam Thacker, an ex-banker and well-known business finance columnist, is offering a free one hour webinar on how to find working capital for oilfield service companies and related businesses.
Sam will explore the myths of small business financing and especially how these apply to oilfield service providers. He will discuss other resources for raising capital and managing cash flow for small to mid-size companies. Most importantly, Sam will offer business owners an overview of the three most important things bankers look for in making a business loan.
Due to Sam’s extremely busy schedule, this informational webinar is only offered once a month. Registration is free and limited to only 20 persons, to ensure the discussion remains interactive and productive. To register for this webinar use our contact form or register by clicking on the orange Eventbrite button in the side bar.
We look forward to meeting you on our next webinar on October 29th.