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​Oilfield startup Collaborative Energy goes on a spending spree: Q&A with CEO Darryl Wilson
By R.P. Stastny
Friday, April 28, 2017, 7:13 AM MDT
Image: Joey Podlubny/JWN
Oilfield startup Collaborative Energy Services Inc. (CoEnergy) announced this week it has acquired two oilfield service companies operating in Canada and the United States, and several pieces of oilfield equipment.
CoEnergy, which launched in January 2017, describes itself as an "integrated, turn-key service company targeting the entire life cycle of oil and gas wells," focused on Western Canada and the Permian, Eagle Ford and Midland basins in Texas.
With these acquisition, CoEnergy now has seven full service rig packages, five rod rigs and specialized wireline, cementing, pumping and transport components and has entered into agreements to purchase additional well servicing equipment.
The company has secured funding through two private placements totalling $4.5 million and a capital financing facility of up to $10 million with Maynbridge Capital of Vancouver, B.C.
CoEnergy's president and CEO Darryl Wilson brings 37 years of oil and gas service industry experience to this venture. He has founded two oilfield service companies: Central Alberta Well Services Corp., which he led from 2005 until 2010; and the contract drilling, well servicing company, CASA Energy Services Corp. (from 2010 to 2015).
Here is what Wilson had to say in an email to JWN about the launch of CoEnergy.
What opportunities do you see for CoEnergy at a time when the services industry continues to consolidate and there is only a tepid oil and gas recovery underway?
In the Western Canadian Sedimentary Basin, the industry is focused on workovers and abandonments, with 80 per cent of current service rig utilization (as of 2016), $30.6 billion of deemed liabilities in Alberta, 82,004 inactive wells in Alberta and 7,921 forecast to become inactive.
It takes an average $100,000-plus to abandon a well, and industry and the provincial governments are making solid commitments to solving the abandonment issue.
Also, the Cardium, Montney, Duvernay, Viking and Mannville formations will continue to be some of the most active plays in 2017.
In Texas, drilling activity is increasingly concentrated in the Permian Basin, which extends beneath an area approximately 250 miles wide and 300 miles long. The Permian holds nearly as many active oil rigs of the rest of the U.S. combined (onshore and offshore).
The Wolfcamp shale in the Midland Basin portion of Texas' Permian Basin province contains an estimated 20 billion bbls of oil, 16 Tcf of natural gas, and 1.6 billion bbls of NGLs.
Tackling both the U.S. and Canadian markets simultaneously seems ambitious for a startup. What is your strategy?
We have been very conservative in our acquisition targets. Both companies have been well established in Canada and the U.S. We have current demand for additional services from many of the major producers in the U.S.
Currently, there is a demand for Canadian rigs and rig technology and Canadian crews. The U.S. market provides full-year cash flows and service rig utilization that is closer to the wellhead completions and workovers. Rod Rigs, old service equipment in Canada, looks to become a big growth opportunity as a new service offering in Texas, Oklahoma and New Mexico.
In Canada we want to focus on rolling out our integrated, turn-key project approach to abandonments. Service rig utilization in Canada has mostly been focused on workovers and abandonments. We will be mobilizing two additional service rigs and rod rigs to the US during the Canadian spring break up period.
What are your next steps?
Immediately, it is to have our service and rod rigs meet the demand with large producers operating in the Permian and Eagle Ford basins in Texas.
Also to immediately to roll out our CoEnergy Abandonment POD: a complete grouping of equipment that can do the entire job. So it's an integrated, turn-key abandonment offering in Alberta, BC, and Saskatchewan.
We're also currently looking for new acquisitions and equipment purchases that will provide accretive growth for shareholders, strengthen our dual operations base, build on our current fleet and broaden our equipment services offering.
Finally, we're looking for near-future financing to accomplish larger corporate growth goals.
Can you discuss access to capital?
Unfortunately, as a start up, access to capital is very difficult due to the uncertainty in the industry. Traditional banking is basically unavailable.
Investors are very conservative, so you have to revisit your personal contacts, individual investors that you have done well for in the past and people who believe in you and the team you have put together.
Will you be able to get the money you need?
Yes, we have ample opportunity for future growth with our current investment portfolio and agreements with our banking institutions.
Are their opportune equipment purchases to be made in this economic climate?
Yes, we are working on several acquisition opportunities.
Unfortunately, due to the current economics for many well-established companies and the uncertainty and restrictions that have been put in place by lending facilities, even service companies that have the initiative and drive to move forward are unable to do so.
These are the companies that we are in discussions with, along with their lenders, to ensure an economical and prosperous solution is made for all.
Lastly, what is your biggest challenge in getting this venture up and running?
Access to available capital to take advantage of current market conditions to provide growth.
Hopefully the investment community will wake up from the slump and take the risk in a new company with a great track record and enjoy the benefits.
If not, we will just continue to do it on our own.
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