Seller Financing Available
Oilfield Pipe Inspection/Testing Company (KS/OK)
Oilfield Pipe Testing Company (KS/OK) - no tie to Oil prices
Project Testing (S-Corp) is in the business of Hydrostatic Testing of oilfield tubing and casing at the well site.. This is more of a "maintenance" business and not tied to oil prices whatsoever. In fact, in 2009, Sales only dropped off less than 15%, which was good for any industry, even amidst a significant drop in Oil prices at that time. “Hydrotesting” is vital to the oilfield customers as it’s the most effective as the last “stamp of approval” of pipe before going back into the well. The company 100% work-over related and there is ZERO tie to new drilling whatsoever, with oil prices of very little concern. In fact, pipe has to be tested for operators at $100 oil or $40 oil, as operators do not want corrosive pipe in their wells in any event as this is, again, more a "maintenance" item than anything. Further, in Kansas it is very cheap to drill. And production happens at very low levels compared to other regions given the refineries and infrastructure in place in this market. The company MADE money in 2009 (was only down less than 15% for Sales from 2008), and had a $110k profit (not EBITDA) that year. Very few companies can boast this, and proves the company does well in any environment.
Founded over 40 years ago, the business has been a stable player in the “oil patch”. Thus, Revenues have remained consistent over the years, i.e. 2010 Sales were higher than 2012 Sales. With 8 employees, 6 trucks with testing equipment and 3 crews, the business remains a mainstay for Kansas and Oklahoma E&P companies/operators. With close to 100 customers total, not one accounts for more than 10% of Sales. The company also recently added investment to make the company a better mousetrap, i.e. upgrading several of the units to bring them more "up to date".
• Competitive Advantages: Being a mobile tester vs. an actual plant has tremendous advantages in servicing customers at the well site – saving time and money. Reputation and brand are very strong. Company stays busy in any Oil price climate.
• Customers/Market Channels: Some of the largest producers in the KS/OK area highlight the customer base, but with not one dominating Sales. Customers are predominantly E&P/operators.
• Growth Opportunities: Adding an EMI (electro-magnetic inspection) unit is what the owner says he will do next whether sold or not, and is the logical next growth move. Expansion into other markets/regions – Eastern CO, Northern OK and the TX Panhandle where the reputation/brand still reaches. Increasing employee base/sales force would be important. Current owner does no advertising or marketing and has had no desire to grow the business.
• Financials: No debt and the company is having a record year as the ownership is doing some marketing this year. Midway through 2014 vs. 2013, the company was up 41% top-line and 45% bottom line. A lot of this growth has been attributed to the MS Lime growth as production/workover is being done now in this area.
In Kansas, it is very cheap to drill compared to other regions, so new drilling happens here even in the $50's and $70's/bbl. Also, according to Citi Group Kansas is one of the lowest production cost states for break-even, as low as $50/bbl and even lower in some areas of the state. Plays like the Niobrara, Permian, Eagleford and Bakken all operate closer to around $60/bbl for production break-even. The MS Lime play is one of the cheapest shale plays to boot. Only the Marcellus is cheaper of the major US plays.