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The Most Exciting Oilfield Service Firm You’ve Never Heard Of

The Most Exciting Oilfield Service Firm You’ve Never Heard Of
January 28
00:05 2016

OilPro
Article by Joseph Triepke

For the past decade, we’ve been conditioned to believe that bigger is better in oilfield services (OFS). The large oilfield service and equipment supply companies have the best technology, the best talent, and they offer integrated services to the largest E&P companies. Many smaller oilfield service and equipment firms have endeavored to break into the arena dominated by household names such as Schlumberger and National Oilwell Varco.

In this downturn, the conventional wisdom “bigger is better” is not absolutely true. Size improves survival odds, but it does not mitigate the pain – the big guys have a lot to lose during this downturn. Their revenue is evaporating with E&P capex cuts. Many of their assets will soon be written off. And talent they’ve invested heavily in is being hemorrhaged to save costs.

At the opposite end of the size spectrum, and in a most unlikely place, we find the most desirable strategic position – starting from zero. The most desirable strategic position right now is the combination of having low operating leverage and the cash to pursue growth via acquisition. To use a stock market analogy, when stocks crash, the best positioned traders are under-invested and have most of their assets in cash. Rubicon Oilfield International is the under-invested, cash-rich investor in oilfield services at the moment.

If you haven’t heard of Rubicon, you aren’t alone. At this point, Rubicon is just five experienced OFS founders, backed by a large private equity company, with a vision to build the next best-in-class oilfield equipment manufacturing and supply company. The company sits in a classic position of strength for the downturn: significant capital to spend without the burden of under-utilized infrastructure and assets. Rubicon may be the most exciting oilfield service company you’ve never heard of. We recently spoke with one of the founders, Jayme Sperring, to get the rundown. Here’s Rubicon in a nutshell:

  • Rubicon is backed by a $12bn Warburg Pincus fund and represents the private equity firm’s first foray into oilfield services with a line of equity investment in an OFS management team. Warburg has provided Rubicon management an expandable $300mm line of equity to fund strategic acquisitions and organic growth in the global oilfield products and equipment market. Several well known industry veterans sit on Rubicon’s board of directors, including Steve Newman, the former CEO of Transocean.
  • Six-month old Rubicon will focus on building a portfolio of downhole products and technologies, either sold or rented, targeting all phases in the life of a wellbore (drilling, completions, production, abandonment). Unlike many other small companies, Rubicon is adamant about building a global footprint as quickly as possible to help mitigate the risk that comes with heavy exposure to the short-cycle North American market. CLICK HERE TO READ THE REST OF THIS ARTICLE ON OILPRO

 

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1 Comment

  1. Dom
    Dom January 29, 16:05

    Interesting!

    Reply to this comment

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