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Apr 7, 2018 — Company is a 7 year old, well-established oilfield equipment rentals and service provider, serving primarily oilfield drilling operations in the North Dakota Bakken formation and Texas Permian Basin. They operate one branch located in each state, and rent items of all sorts to oil drilling companies and provide services for work over and frack locations as needed. Most of their work is done on the drilling side of oil and gas operations and they service the area within 100 miles of each branch location. Company also offers experienced personnel to aid in the construction and repair of production locations and environmental remediation.
The business grew quickly by direct marketing to oil drillers and company men, and focusing on safe, timely and quality execution of operating commitments. Continued growth was driven by operational excellence, word of mouth and repeat business. The North Dakota and Texas locations have diverse strengths and respond to their respective market needs. Equipment and personnel can also be shared between both locations, as needed.
Company is a profitable business with rapid growth potential. Current customers are primarily oil and gas producers with approximately 30-35 active MSA’s (Master Service Agreements). The largest customer is an energy producer and accounted for 29% of revenue in 2017. The top 5 customers accounted for 74% of revenue in 2017. However, this does not tell the entire story as the company has developed extensive relationships with ‘Company Men’ (eg drilling managers) and drilling superintendents throughout their market areas. These key decision makers, when they change companies, typically refer the company to their new employer.
The owner feels that a major advantage over competitors is the quality and seniority of their employees. The crews, are professional and are a major asset to the company. Company currently employs approximately 40 full-time (all W2 paid). Customers are happy with the service and committed to using the company. Owner primarily provides oversight and focuses on locating and purchasing rental equipment at prices that allow for quick pay-offs.
They do no outside advertising but receives repeat business and referrals from an estimated 35-40 oil drilling companies. The owner feels they could grow faster by purchasing rental equipment to eliminate 3rd party rentals in TX division, continue adding rental equipment (with 4-8 month payback), continue to build management leadership structure and expand to other oilfields.
The asking price for the assets of the business is $10,350,000 EXCLUDING REAL ESTATE. The seller will consider financing up to 15% of the purchase price to a purchaser qualified/approved by the seller). All financing to be personally guaranteed. Seller prefers to sell for ALL-CASH. The assets include inventory at cost of $125,000, work in progress of $300,000, accounts receivables of $1,400,000 and FFE/V (Furniture, Fixtures, Equipment, Vehicles) valued at $5,650,000. The TOTAL ASSETS are $7,475,000. The price will be adjusted for actual inventory, work in process (WIP) and accounts receivables as of the sale date.
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