American Oil and Gas Reporter - July 2016 - 45

SpecialReport: Private Equity Strategies
nies to change the ways they reach their
goals, Turowsky says. "Service line pricing has fallen 10-50 percent, reducing the
addressable revenue opportunity for most
service companies more than 50 percent,"
he comments. "To survive, service companies have had to write new playbooks."
Connelly predicts those playbooks
will continue to change as the industry recovers. "We have gone through a historic
capital build cycle, and it is not clear that
all those assets we built will go back to
work," he says. "As an industry, we are trying to figure out which assets will be needed to lock in the productivity gains we have
seen in the past 24 months. In this more
selective environment, the service company mantra will be, 'How can I help customers work better, faster, cheaper, and
safer?'"
Fueling With Field Gas
Thigpen Energy is one of many private
equity-backed service companies that reports it has successfully reinvented itself
in response to industry conditions. The
company spent millions on equipment intended for treating, compressing and
transporting gas that would otherwise be
flared. When North Dakota eliminated one
of the key demand drivers for that equipment by relaxing its flaring restrictions,
Thigpen Chief Executive Officer James T.
Schauer says the company drew on its fueling expertise to repurpose the equipment.
"Today, we are using it to enable operators to power drilling rigs and frac
spreads with field gas," he details. "For example, we are powering four frac spreads
in the Utica Shale play with engines that
burn 30-40 percent diesel and 60-70 percent natural gas. Field gas costs $1.85$2.00 an MMBtu, or one-fifth the cost of
diesel even at today's low oil prices, so we
are providing huge savings.
"Because the field gas comes from
gathering lines or wells near the operation,
we are taking trucks off the road to reduce
emissions, wear and tear on roads, and
safety risks," he adds.
"The Utica is the hot spot for our field
gas operations, but the concept works anywhere we have access to field gas,"
Schauer comments. "While getting it
from a gathering line that we can move
down as our customers' operations change
is ideal, our equipment is portable enough
that we can use gas from nearby well-

To pursue its vision of becoming a global, best-in-class organization, Rubicon Oilfield
International reports it is drawing on its line of private equity to acquire product suppliers that have compelling technologies and motivated employees. Its first acquisition
was Tercel Oilfield Products, which supplies drilling enhancement and completion running tools that simplify well construction.

heads."
In mid-May, Schauer reported speaking with an Eagle Ford operator to try using field gas there.
"Using field gas is a great idea, but in
the past, people would have to grapple with
where to get the gas, how to remove the
heavy components, and how to regulate the
pressure," he says. "With gathering infrastructure providing an abundant gas supply and equipment now capable of treating it, the dots are being connected."
As demand grows, Schauer says Thigpen will be ready. "We have the capability to do 22 separate operations, and we
are doing only seven or eight today," he reports.
While the company's field gas operations should grow, Schauer says Thigpen's
bread and butter has become its "virtual"
liquefied natural gas pipelines. "When a
natural gas pipeline goes down to be inspected, or when deliveries to a specific
customer are curtailed, we provide gas
through LNG tankers," Schauer describes.
"A single LNG tanker holds as much as six
compressed natural gas tube trailers, so we
are taking a lot of trucks off the road.
"For one of our projects, we provided
1.8 million cubic feet an hour to a power
plant that lost access to natural gas when
cold weather increased local demand," he
reports. "No one else is taking on projects

that big. We can do it because our private
equity partner trusted us enough to give us
the capital to buy the equipment."
Integrated Product Supplier
As 2014 drew to a close, Michael
Reeves and four other seasoned executives
say they left great careers to form Rubicon Oilfield International. "We saw the
market starting to deteriorate and felt it
would create an opportunity to acquire differentiated downhole product manufacturers and integrate them to create a best-inclass, global organization."
Time has only reinforced the decision
to launch Rubicon, says Reeves, the company's president and CEO. "Over the
past two years, we have seen producers and
service companies look for vendors that
can provide a broad spectrum of high value products in a highly responsive manner. Our commitment is to deliver an extraordinary customer experience centered
on highly motivated people and practical
innovation," he remarks.
Rubicon is backed by a $300 million
line of equity from a global private equity
firm with a 25-year track record of
building businesses and creating value in
the energy sector, Reeves says. Rubicon
made its first acquisition in May: Tercel
Oilfield Products, a global supplier of
drilling enhancement and completion
JULY 2016 45

American Oil and Gas Reporter - July 2016

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