Review Your Oilfield Contracts, Loans and Funds for Cost Savings

Although we're hearing the economy is turning around, get a jump on better deals now while the economy is still in challenge mode. Start by reviewing your current contracts, loans and funding to see if you can do better. It can't hurt to ask. All they can do is say, "No."

Benefits of Renegotiating Agreements

The Small Business Research Board has published a survey with over 1000 responses from small business. The survey shows that 18 percent of small businesses have renegotiated agreements.

What we can learn from this survey is that businesses—including oilfield-services companies—need to pursue getting better deals. This could range from better leasing terms, lowered monthly payments, shortening the number of years in the lease or reducing the amount of leasing space. A business managed to not only renegotiate with a client, but also handoff four of its employees to the client. Result: Payroll savings and a big contract.

Other Ways to Find Cost Savings in the Oilfield

Some vendors may cut you a deal or give you better rates when you pay your bills on schedule or early. Even if you struggle to pay on time, you might strike a deal with the vendor who would rather get some money than none.

Banks continue to hold on tight to their purse strings, which makes it difficult for some oil and gas services companies to land loans or lines of credit. After all, the Federal Reserve says that two-thirds of banks have added restrictions in their lending terms. Furthermore, fewer banks are willing to write small business loans compared to other types of loans according to The Wall Street Journal.

"...many small business owners don't even bother applying for new loans, since they assume there's almost no chance of being approved by loss-scared lenders," says the WSJ article. While that applies to banks and some lenders, not all oilfield lenders refuse to work with small businesses.

Few oilfield companies look to venture capital investments. However, it's interesting to note that VentureSource says that such investments have dropped by 30 percent in the fourth quarter of 2008.

What other ways can you find cost savings in your oilfield services company?