Total Energy Services (TOTZF) CEO Daniel Haylk said some of his competitors are acting irrationally
“Current industry conditions are as difficult as any faced by Total Energy since we commenced operations in 1997. Price competition has been fierce with some competitors literally offering certain of their equipment and service for free in order to secure what little work there is. We cannot and will not compete with free.”
They’re thinking very carefully about who they do business with
“We have remained diligent in the management of counterparty credit risks. Our refusal to pursue unprofitable work and recklessly extend trade credit has undoubtedly had a negative impact on near term equipment utilization and revenue. On the other hand, our bad debt expense has been minimal and our equipment fleet is and will be in a good state of repair and ready to resume normal and profitable operations in short order with relatively little start up costs.
They are turning down business in some cases where they are concerned about whether they will get paid.
“We’ve turned down work where we’ve not been willing to accept the credit risk. The worst thing than not getting a job is getting it and not getting paid.”
Total Energy Services (TOTZF) CEO Daniel Haylk said he takes business phone calls on Saturday’s at 10:00pm
“We have very strict credit controls, I will get phone calls 10 at night on Saturday night as to whether or not we can work for someone. And we will do due diligence, I will do due diligence at 10 at night. Usually someone phoning 10 at night on a Saturday, meeting at for six in the morning the next morning. That’s a big flag. But definitely we’re requiring deposits in some cases. We flat out refuse to work unless payment upfront.”
Total Energy Services (TOTZF) CEO Daniel Haylk said part of their corporate culture is digging in when times get tough
“So first of all, in 19 years we’ve never closed any of our rental transportation branches and we’re not going to now. We’ve had situations in the past where there’s been good discussions with divisional management about shutting the branch down, three years later became our number one branch literally. When we make a commitment to a community, first of all, we don’t open them lightly but once we open them we commit to that community. Now listen, we’ll bring our cost structure down as much as we can. But we stick, we’re not quitters. The easy thing to do is quit and we don’t quit. That said, and listen we bring our cost structure down and then we hunker down and – but that’s intangible assets that’s not on our balance sheet that when activity levels recover and you’ve supported a small community during a pretty rough time they remember who paid their property taxes during the rough times. They remember who supported the community employed the locals. And I can tell you number one, the community defends you. And number two, it’s pretty easy to find people to work for you relatively speaking. And so we take that commitment very serious. And we’ve never shut a branch down and we’ve hunkered down and gone through some pretty tough times. And we’re proud of that. That’s something that defines our culture.”
Total Energy Services (TOTZF) CFO Yuliya Gorbach said prices for energy operating equipment continue to decrease across the oil patch
“Revenue per spud to release operating day in our contract drilling division during the fourth quarter was $16,405, a 24% decrease from $21,503 per day.”