LLOYDMINSTER, Alta. – Dynamite Oilfield Services, based in Alberta, is operating in survival mode hoping to be rescued by higher oil and gas prices and an end to the downturn.
The company finds itself in an unprofitable position for its core fluid hauling, picker and winch truck services provided from locations in Lacombe, Lloydminster and Drayton Valley. The oil and gas producers it serves in Western Canada continue to cut capital costs and trucking rates by as much as 50% in response to low commodity prices.
“This downturn is the worst I’ve ever seen. I’ve been in this business for 22 years and I’ve never seen it this bad,” said Shawn Bexson, company president and general manager.
Sales coordinator, Steve Smith, left, and assistant manager Delbert Docken rolled out a Western Star winch tractor pulling a tank cradle at the new Lloydminster facility.
He noted when producers cut spending, the service side of the industry usually gets penalized the most.
“It doesn’t matter if it’s trucking or well servicing or maintenance, the service companies take the biggest hit,” he stressed. Bexson founded the company in 2003 and has steered its growth through several oil and gas price cycles, adding new services and locations in Lloydminster and Drayton Valley with headquarters in Lacombe. The business ownership includes Bexson and his younger brother Kris who manages the Lloydminster office along with Devin Hoffer, operations manager in Lacombe.
Its fleet of trucks includes pickers from five to 45 tons, Texas bed rig ups, pilot trucks and a custom-made trailer designed to handle 750- to 2,000-barrel production tanks. It recently purchased a 40-wheeled unit for heavy hauling even in road ban conditions. Dynamite also offers oilfield rentals of mobile catwalks, wellsite shacks, rig matting and light towers and it builds portable roads with a PRC Mammoth mat. Given the current low commodity price environment, Bexson is not overly optimistic about the potential for a quick recovery for his business or the energy sector in general.
“It’s a declining industry. We don’t know where the bottom is,” he said.
“I think it’s going to be a couple of years before we see things even start to come around from what’s going on in the world – from what I can make sense of the literature being sent to us.”
The current downturn hit home for Bexson last November when West Texas Intermediate oil fell below $70 a barrel putting the company into a reactive mode to cut costs and find new business.
“We’re just waiting to see where the dust settles. We are still currently reacting. We’re still trying to figure out how to make money in this environment,” he said. Bexson spoke from Lacombe about the impact of the slowdown on business during a conference call in Lloydminster in late August with WTI oil under $45 a barrel.
“We’re just in survival mode. We’re just trying to survive – trying to outlast our competition,” he said noting he will continue to diversify.
“We’re trying. We’re recruiting salesmen trying to market our business; trying to diversify our services and go forward,” he said with a sense of frustration in his voice.
“Like I said, I haven’t made money in six months and I’m trying to figure out how. We’ve cut back in every single area and we’re still going to be cutting back in the months to come.”
The key to staying competitive in the long run he said is talking with the competition and getting to know what’s going on in the field.
“We’ve got to be at the table with all these jobs and be putting bids in – just getting things moving,” he said.
Dynamite has cut its workforce and all remaining employees are working half time hours until business picks up. Steve Smith is the new sales coordinator in Lloydminster hired in June to market the company and get equipment moving.
“My role is to create new business and maintain what we have and just find other sources of income – maybe the portable roads and go the municipalities and see who we get onboard with,” he said.
“Just like Shawn said – trying to get into the bid process at least and have the opportunity to throw our name and prices at them and see from there what we get out of that.”
Smith had all but lined up meetings with half a dozen oil companies in Calgary to start another sales trip in late August or early September.
“If you can get an opportunity to meet face-to face, it shows that they’re interested. A phone call can only go so far. If you can have a little sit down with them – that’s where you need to be,” he said.
Whoever he speaks with Smith makes a point of stressing Dynamite’s strength is its picker and hauling abilities.
“That’s what we shine on and that’s what our history is,” he said.
The business has grown from a merger between Dynamite Oilfield Central Alberta, the original name of Shawn’s company with Dynamite Oilfield & Picker Service in Lloydminster, which his brother owned. The consolidation combines light picker and hot shot services from Lloydminster with a fleet of heavy haul bed trucks, winch tractors and large cranes in Lacombe and fluid hauling in Drayton Valley.
“Anyone who wants to make it in this business is going to have to partner up and work with people to make it. You’re not going to make it alone anymore,” said Bexson about the merger.
“It was a decision made four years ago now. Do I regret doing it? No, I have an office in Lloydminster, Drayton Valley and Lacombe. The benefits of having satellite offices – we’re spread out and we have a bigger footprint.”
The Drayton Valley location opened two years ago where Dynamite has been hauling water and flow-back fluids from fracking to disposal sites in the region for several years. The oilfield service hotspots have been the Duvernay shale gas play and the Cardium light oil play in west central Alberta.
“The work is rapidly declining though,” noted Bexson as the downturn slows exploration and drilling.
The company services the oilfield from Manitoba to British Columbia, but with oil around $45 a barrel, Bexson says it’s not active anywhere these days.
Local efficiency is on the mind of Delbert Docken, the assistant manager and dispatcher at the new Lloydminster office and shop that opened in the fall of 2014 on a five-acre site.
The new building is equipped with its own truck wash and has plenty of space for indoor truck storage and in-house maintenance for additional cost savings.
“We’ve got to get things out quick and be cost efficient for our customers so they call back,” said Docken.
He’s pleased that Dynamite has kept enough staff to run equipment while some companies haven’t.
“If you don’t have any staff, it’s a little hard to keep the doors open,” he said. “Dynamite is trying to be proactive and keep things going as much as they can and for as long as they can before they have to make more decisions and cuts.”
Like all employees, Docken wears multiple hats in and out of the shop to save the company time and money.
“I go from being assistant manager, from being dispatcher, to jumping in the truck if I’m needed to go and move something” he said. “You got more utilization because then you can go from being staff in the office down to in the field.”
Docken has been in the business since the first major downturn in 1986 and he said this downturn reminds him of that one. “Back then, you couldn’t get a job pounding nails. You couldn’t get a job doing anything. I don’t think there is a magic formula – just keep on plugging away and hope for the best,” he said.