Last year, OTC set an attendance record with nearly 110,000 O&G professionals from around the world; the most since 1982. More than 4,500 rigs were running that year, and by the mid 80’s, less than 600 rigs were turning right. Arguably the worst bust ever. To most in the space today, something they will only know of through the memories of the old-timers. However, if you haven’t had a chance to drive through Midland/Odessa, the picture above tells it all; dozens of brand new 1500HP AC drilling rigs standing tall, waiting for their chance to get in the mud.
Everyone has an opinion, but most drilling contractors agree that the days of mechanical rigs are behind us, at least here in the US, and in large part. SCR rigs have replaced most, and AC rigs, believe it or not, are still being built by the heavyweights in our industry, albeit at a slower roll. The cost corrections have been made, oil prices are climbing, and hundreds of the land rigs that have been stacked will be back to work before we know it, along with the ones that can actually run them. My prediction anyway.
But, I guess the smell from the blood in the streets travels East, because we’ve been fielding a plethora of calls and emails from MENA, Europe, and Asia from drilling companies who are curios to learn what they can buy on the cheap. And of course, an SCR rig is a major upgrade for a lot of these drillers, so needless to say, we’ve become quite popular. Prolific times, no doubt, and a day that I certainly will later reminisce with my children, should they decide to follow the steps of their father, and grandfather. I sure hope they do. I love this business.
So, what will be the last rig standing? Your guess is as good as mine, but I’d bet big that it will be one whose life was long, hard, and at times lonely. Even rigs must succumb to the circle of life.
Hope to see you at OTC!
Henderson Rigs & Equipment is a Houston-based U.S. supplier of new and remanufactured drilling rigs and drilling equipment to domestic and international drilling contractors. In addition to our own new and remanufactured equipment, Henderson engages a large, Worldwide network of quality vendors, which allows us to locate virtually any piece of equipment used on a drilling rig.
After selling DOYLES in June of 2012, I had a choice. Stay on with the company that acquired us, have a big title, a nice salary, stock that vested over three years, or…I could quit, or resign as some would call it. Of course, I did what anyone entrepreneur would do in my situation, I quit after only four months. Quitting meant that two thirds of my income would be interrupted for what was an unknown amount of time, and it also meant forfeiting the stock the company had worked so hard to keep during our negotiations. But, I felt as if I had no choice. For 16 years at that time, I’d never worked for anyone, and although I liked the people that I would be working with, I needed to be in control of my own destiny. Donedees.
So, there I was, no job, no business to speak of, no team, and no real income. I was in EO (Entrepreneurs Organization) at the time, and I remember making a presentation to my forum taking them through the 11 opportunities I was pursuing. I was throwing everything up on the wall to see if it would stick, and it was as if the wall was made of teflon. One of my forum mates challenged me to figure out what I was going to focus on, because no one can pursue anything and everything that they are interested in, and be good at all of them. So, I did; got focused that is.
As I reflected over the success and failures I had experienced over my career, I realized that the O&G space had been good to me, and that it was best that I leverage the skills and experience I had to impact the industry in a positive way. Although being in business for many years at the time had rounded out my skills, my passion was and remains sales, marketing, branding, business development, etc. All customer facing aspects of running a business. I can read a balance sheet, income statement, and cash flow statement better than most, but prefer to discuss strategy, vision, and market domination through unparalleled service, honesty, and transparency.
So, I launched DrillingExchange.com at OTC in May of 2013, as it allowed me to marry the skills I had developed by running a large web development company in the late nineties with the previous 10 years I’d spend in the oilfield equipment space. It was a very successful launch, and although there’s been some rough patches, the company has developed into a viable on-line marketplace for drilling rigs and equipment. Plug: If you have rigs and equipment for sale, and you don’t have them listed on DX, shame on you. Then, in November of the same year, part of my non-compete expired, so I started trading equipment again. Boy, was I disappointed.
For the past ten years, I had invested a significant part of my time and energy into building a company that stood for something, and I was under the impression that once I was “back in business” I’d have a huge following of fans and supporters. Nope. I was discouraged, depressed, and at times angry. And then it struck me…I was a nobody. It’s funny now, but at the time, I realized that although we had built a good reputation as a company, I had been successful in making sure that the company didn’t need me to operate as a business, and as a result, no one knew that the values that built DOYLES, were ones I had instilled in the company, and it’s people. It was time for me to go back to work, and build relationships one customer and relationship at a time.
I hit the road, made mistakes, and more phone calls per month than I had in previous years combined. If I were going to be successful in the buying and selling of rigs and equipment, I was going to have become a hustler, no differently than I was when I started my first business more than 15 years prior. Smile and dial, greet and meet, conventions, luncheons…the whole nine yards. Oh, and once I got up off my ass, and got a goal, good things started happening, and mama got a brand new bag.
Whether you run your own business, or work for someone, you can still be a hustler, and control your own destiny. That doesn’t always mean you’ll be rich, or wealthy, but if you want to be successful on your terms, you got to find the hustle, but be warned; it’s hard to be a hustler. Leaving you with one of the greatest movie scenes ever from Pain & Gain.
About Dan Henderson
Henderson is the founder of Henderson Rigs & Equipment, a leader in the sales and brokerage of drilling rigs and capital equipment; as well as the founder of DrillingExchange.com, the fastest growing, commission-free, on-line marketplace that connects buyers and sellers with no middle man.
When I was five years old, my Dad took my Mother and I to Jamaica. It was my first trip anywhere, and it was paradise. My Dad wore a gold nugget Rolex, and carried literally thousands of dollars in cash in his front pocket. He bought my Mother a diamond that made every woman jealous, and we were rich. And then oil went to $10 and the nearly 5,000 rigs that were drilling in the US went to 1100. We were broke, and although my Dad didn’t sell his gold nugget Rolex, he had me put it in the floor safe of the home we lived in on Cornett. Since then, I’ve lived through my own oil boom and bust, and likely will see a few more. My skin grows thicker by the minute.
What I find entertaining are the theories manufactured in an effort to explain the feast or famine nature of the O&G life. Supply, demand, dictators, war, cold winters, WMDs, bailouts, etc. You name it, I’ve heard it, and if you’re in the O&G, you can add a few descriptors yourself I’m sure. The point is, no one knows if and or when any or all of these influencers will drive the price of oil up or down; one can only speculate. However, and as silly as it sounds, anyone can predict two things; it will go up, and it will go down. The key is being right. Rarely is anyone right, or at least consistently right. If and when you are right, everyone loves you, but the minute you’re wrong, the booing begins.
You’d think that by now, someone really smart would have figured out a way to strike a balance between growth and sustainability, but for the most part, the only companies that can stay steady are the ones that have figured out how to make hay, and sit on it. The small guys not so much, which is why so many get washed away in the huge swells of the O&G storms.
But before you think this is a doom and gloom piece, it’s not. I happen to be one of those that have grown to appreciate the volatility of the industry. The older I get, the more I realize that it’s all about how you play the game. The price of oil will be $150 before long. No, I can’t tell you when or why, but I can tell you it will be sooner than later. Why, because the World needs it badly, and the swings typically don’t last. And, although I’m a supporter of alternative energy, we’re likely a hundred years away or more from replacing oil and gas as the primary energy source.
So, instead of worrying about how many rigs are being stacked, how low the price of oil will go, or whether you’re the next to be let go; focus on doing your job, servicing your customer, and getting your house in order, because before long, the World will give us a reason to be excited once again.
Oh, and if you happen to have a nugget Rolex, they’re back in, so wear it proudly. You know who you are.
I’ve joked about entrepreneurialism being a disease, a curse, and possibly even an addiction. It’s no joke. It is involuntary, and wreaks havoc on your body and mind. At times, being an entrepreneur makes it difficult to be in the moment, or maintain a healthy work-life balance. It requires that you take risks, which often times include those closest to you taking the same risks, whether they agreed to or not. Entrepreneurs are innovators, problem solvers, have a high need for achievement, but most of all…are change junkies. I absolutely love challenging the status quo, and exposing complacency. I love to disrupt rhythms to find a rhyme or riddle for that matter. Change is the catalyst to solving any problem, no matter the size, scope, or genre. But change has a price, and it’s too high for most to consider. For me, fear remains a constant reminder of my past and potential failures, but my disease is what drives me to change, grow, and repeat. Life is collection of experiences, not things. Without change, your collection will remain small.
Recently, I’ve been quite discouraged. My income is hemorrhaging, I’m lacking in creativity, I’ve got writers block (fun to say that,) and many of my most recent deals have gone South. But…I feel alive, and as crazy as it sounds, it’s times like these that require a tremendous amount of focus, determination, and work. And I don’t mean mental masturbation…I mean get on the phone, get in front of the right people, ask for the order kind of work. With cash reserves diminishing, that time is here for me and my house.
As I prepare to change my situation, I challenge you to do the same. Let’s be change junkies together! I promise, we’ll live to tell about it.
From the time we are young, most of us are taught to be kind, considerate, respectful of others, and above all honest. In school, we learn to be punctual, responsible, and that there is a direct link between application and results. Sport teaches us the value of working together as a team. College attempts to prepare us for adulthood by introducing accounting, ethics, psychology, sociology, and politics. For a lot of us, our first job teaches us something much different.
My first “real” job was with a shipping company; I was 18. For two weeks I received on the job training. I learned how to operate the computer systems, drive a forklift, dock safety, and the company history. My first day on the dock however, I learned about unions. Over the next two months, I quickly became one of the most efficient workers on my shift. The union workers hated me, and gave me hell. I was cursed, threatened, forced to pay dues, and bullied. I quit not long after a friend of mine was forced to defend himself in a fist fight. He was unharmed. I wasn’t sure if I’d be as lucky.
Since that first “real world” experience, I’ve had many more, and have learned that business is mostly a dog eat dog world, driven by the fear of many, and the greed of few. Where secrecy, silos, and perception reign; and the arrogance and ego of men is celebrated and glamorized. Where nothing is personal, just business.
Imagine this year’s best selling books with the following titles:
- The Top Rung: How to Deceive your Way to the Top Through Bribery and Manipulation
- Bankruptcy as a Business Plan: How to Make and Keep Millions you Don’t Deserve
- Lawsuits for Hire: Let’s Hope they Settle
Last night, I watched a documentary on Enron. It reminded me how hypnotizing greed can be. It can make even the most scenical of skeptics surrender to it’s charm, and I am no exception. Ten years ago, I got caught up in a Nigerian scam. It involved a bogus multi-million dollar contract from a major oil company, $10,000 in cash concealed in two first class dopp kits, a Nigerian chief, and a Montblanc pen. The story is quite incredible, and ends with me escaping in the middle of the night from my hotel in Warri to avoid being kidnapped. Perhaps I’ll spend a couple of hours one day inventorying the events of my Nigerian nightmare, but I mainly wanted to make it known that I’m no stranger to greed. The deal reeked like a dead fish, and I sank my teeth in.
On more than one occassion, I’ve described greed as the gremlin that crawls up your back, looks you in the eye and tells you that you deserve more. Like the line in the movie Wall Street: Money Never Sleeps, when the young actor asks his nemisis what his number is, and he says “more.” More is never enough.
I’m no politician, nor am I the next Robin Hood, but I think there may be something magical about repressing greed. I’ve never experienced or heard of anyone on their death bed wishing they had time to earn more, get more, or spend more. Sure, I want nice things for my family, and myself, but not at any cost.
So to all the other conservative liberals, and capitalistic democrats out there…give generously, do the right thing, and hang on to your soul; you may need your ticket punched some day.
At 21, I was the president of a company that I helped take public. We had a couple of hundred employees, several offices, and not unlike most Internet companies, no earnings. A year later, I decided to buy my first home. The purchase price was much more than I could afford, and it took three mortgages to get the deal done. I had five cars that all had notes, and a lifestyle I could not afford. There are probably posters still floating around with my face on them, and the caption, “Live the American Dream; Spend More Than You Make.” Needless to say, less than three years later, I was broke. All of my cars were repossessed, and I narrowly avoided foreclosure. Over the next several years, I painfully managed to pay off all my creditors and become debt free. Thank you Dave Ramsey.
More than a decade later, I found myself in a similar situation for a much different reason. I bet it all on a company that I knew would be successful. However, my lack of experience, and market conditions, put me in a very compromising situation. I owed millions, and the economic vacuum that existed within our company would not allow us to pay down debt, and make money simultaneously. I had two options; sell the business, or file bankruptcy. Each had it’s advantages, and although there were two options, I had only one choice.
Being an entrepreneur, and being a good money manager are two very different things. The former requires vision, dreaming big, and action. The latter requires discipline, determination, and a plan. However, both require math, as does just about every aspect of our lives. I have to work very hard to stay disciplined in my spending, however, in order for us to rebuild America together, we must develop and maintain healthy personal and professional budgets. It doesn’t mean we can’t have what we want, but it may mean we have to wait. Waiting isn’t so bad.