The simplest way to drive down your well costs is to SPEND LESS.
Duh. But how?
The price of oil has gone down, but the costs of drilling for it haven't changed. Even when oil was $100 a barrel many operators struggled to operate within capital. Now that it’s halved – (on a good day) it’s even tougher.
Over 70% of operational expenses are for contracted services and products.* So it should be no surprise, the absolute lowest hanging fruit to reduce expenses is to bring efficiency to your supply chain.
We’re not talking about beating up your suppliers for a lower cost. You’ve been doing that – successfully. Supplier margins are razor thin – costs are just about as low as they can be. Same for delivery costs. Trucking companies are operating with the lowest prices in decades.
As they say, you can’t get blood from a turnip – and it wastes more time and resources to try.
What we mean by “bring efficiency to your supply chain” is to reduce your costs by heightening visibility and accountability – and eliminating un-needed, non-productive time.
You currently waste thousands of dollars (a day sometimes) on delayed deliveries, missing shipments, and equipment holdover. This waste can be eliminated and save you 5-20% of your total budget. What could you do with an additional 5-20% of your operational budget? The possibilities are very intriguing.
How do you bring the efficiencies to regain 5-20% of your budget? Technology. The Internet of Supply Chain (IoSC) technology to be more precise.
Imagine if the supplies you so aptly haggled to a record low price were placed on a truck that you also secured for a rock bottom fee – and then arrived at the EXACT moment you expected them. No waiting, no wondering, no liability arguments, no NPT. Just everything you need at the lowest price, at the optimum time.
We hear you refuting this information – "but you can’t prevent my driver from getting a flat tire, you can’t prevent an error in loading the wrong equipment at the yard, you can’t change traffic patterns – you can’t TELEPORT my supplies." And you’re correct.
What our technology WILL allow you to do – is to be aware of these things the second they occur. So instead of finding out 3 hours after you expected your delivery that your driver has a flat tire and is waiting for a repair – you find out the second the flat happens. You can make alternative plans to save what would have turned into NPT. You can adjust the scheduling of your waiting teams. You can even order replacement items to arrive more quickly. Instead of discovering a critical piece of equipment is missing from your load when the truck arrives on site – you can see it (or not see it) the second the truck leaves the yard – and tell the driver to get the critical piece of equipment. Eliminating hours, maybe even days of NPT, hotshot fees, equipment holdover fees, and more.
Information is power. Visibility is exactly what has been missing from your supply chain, and what is needed to reduce your well costs.
Check out "The Oilfield Supply Chain is Stuck in 1985," it highlights a case story showing you exactly how these efficiencies can be gained.
Your margins are not going to magically improve. Even when the price per barrel bounces back – you’ll always be fighting to work within capital. Why not explore how much you’re wasting and how much you could be saving?
Grab a quick demo. 5 minutes is all it takes.
*Information per white paper done by McKinsey in 2015.