What should I check before buying an oilfield services company?

An oilfield services company usually sells work, not product: hydrovac crews, hauling, rig moves, well-site support. The business is its customers, its trucks and the people who run them. Most of the risk sits in how tightly those three are tied to the current owner. Start your review there, and ask for records rather than summaries.

Customers and the agreements behind them

Ask for a list of customers by revenue over several years. If a few producers account for most of the work, find out how that work is awarded: by master service agreement, by call-out, or by relationship with one dispatcher. Then have your lawyer read each agreement. Some end or need consent when ownership changes, and some can be cancelled on short notice.

Fleet and maintenance records

List every unit with its age, hours or mileage, and service history. Equipment that looks fine on the books may be near the end of its working life, which means a large purchase soon after you close. Ask whether any unit is leased or financed, and who holds the lien. An independent inspection of the major units is a modest cost for what it can tell you.

Activity swings and the people

Work in this sector rises and falls with producer budgets, weather and road conditions. Look at monthly revenue across a slow stretch, not just the best year, and ask how the owner kept crews busy. Then ask who the operators and supervisors are, who has the customer relationships, and whether they plan to stay. A key operator who leaves can take a customer along.

• Customer list by revenue, with the agreement behind each major one
• Unit-by-unit fleet list with maintenance records and any liens
• Monthly revenue through a slow period
• Names and tenure of key operators and supervisors

For the wider process, see how to find a business to buy and the seller-side view in selling a drilling and well services company.