In our April issue, we wrote about drilling rig buying tips. In an interview for our upcoming June issue, we spoke to a driller who talked about using caution when making equipment purchases. Both of these stories got me thinking, how do my readers make decisions when it comes to major equipment acquisitions?
I decided to ask the readers themselves. I ran a poll recently on our website asking about upgrading your drill rigs, though the answers probably apply to just about any major equipment purchase. I asked drillers if they always bought used, leased, always bought new, or did a mix of all of the above. Now, the sample size in an online poll is pretty small, but this is what it showed.
The majority of readers, as you might expect, do a mix of all three: buying new, leasing and buying used. Each of these tactics has its own advantages and disadvantages. If you only ever buy used, you can let someone else work out the bugs for a machine that is new to the market, but you may expect more in the long term maintenance costs. If you strictly lease you're drilling rigs, that allows you the flexibility to scale up or scale down as the contracts you have demand, and leases traditionally come with comprehensive maintenance and support. Buying new can offer businesses a huge tax advantage when it comes to depreciation, as well as security in the knowledge that your rig will be well supported in the field and relatively trouble-free.
Of course, using all of these approaches offers contractors the most advantages and flexibility. A mix of equipment acquisition tactics can also help contractors minimize the drawbacks of any one of these approaches.
The article I mentioned that's coming up in our June issue is part of our new regular You Know the Drill feature. Associate Editor Valerie King spoke with Tim Gallagher owner and founder of New Jersey-based Enviroprobe Service Inc. Gallagher told us, "I try to keep my bets on equipment and services as reasonable as practical." (When the magazine comes out in a few weeks, look for Gallagher's interview on page 40.) Gallagher is probably pretty typical in the drilling industry, particularly in an economy that has continued to be soft since the Great Recession. His approach isn't a bad one. I think, typically, that small businesses like contract drilling firms need to be both optimistic and cautious when it comes to major investments. And it doesn't get more major than the investment in the next drilling rig in your fleet.
If you didn't get a chance to take our poll, you can log on to thedriller.com and take it now. Or, you can send me your thoughts in an email. To me, reader input is just as valuable as a reliable rig.
Stay safe out there, drillers.