Source: The Land Rig Newsletter | September 2016 | Volume 38, Number 9
Somewhat emulating its customers’ approach to cherrypicking well locations with the best potential returns, Scandrill has focused on high-grading staff amid costcutting survival strategies.
Paul Mosvold, president and chief operating officer of Scandrill, detailed his company’s business strategies in a far-ranging interview with Land Rig Newsletter this month.
Discussions centered on what Scandrill has done to weather the downturn in the industry, both from a financial and rig fleet perspective and his outlook for the oil and gas drilling industry. Mosvold attributes Scandrill’s success to the tagline the company has adopted: “the Drilling Contractor of Choice.”
He said the company has been able to push through the downturn by remaining virtually debt free, instituting extensive cost-cutting measures, employing only top performing staff, maintaining rigs properly—including upgrading rigs when they are stacked, and using only rig hands hired and trained at the firm’s Tyler, Texas, operational headquarters.
Cutting costs a primary focus
Cutting costs has become very important to the whole industry, Scandrill included. But there is one cost that Mosvold points to that has increased exponentially: “The cost of stupid has definitely gone up,” he said. “Everyone makes mistakes, and we make them, too. It is our goal to make sure we are making less of them than everyone else. We are doing everything we can to remain the ‘Drilling Contractor of Choice’ for all our customers.”
Mosvold knows a lot about paying the price and looking carefully at all costs since Scandrill was forced, like most other drilling contractors, to take a hard look at how to preserve revenue when cash flow began to dry up. Pay cuts, reduction of matching funds for 401(k)s, reduction of office space as well as people, and overall reductions in daily rig operating costs were strategies Scandrill undertook to break even. Like so many others, Mosvold said, “We don’t have anywhere else to cut. We are down to the bone.”
When having to take a cold, hard look at laying off staff, Mosvold said Scandrill employed a comprehensive grading system that rates all employees from level A (the highest) to level D (the lowest). He said when it was time to reduce headcount, managers and supervisors were instructed to make the cuts strictly according to the grading scale. “When it is time to reduce staff, sometimes it is very tempting to keep someone who is not as efficient as someone else due to reasons other than performance,” Mosvold said. “When it came time to make these decisions, we let the performance ratings speak for themselves. First, we got rid of level D, then level C, and then we went to level B. When we were forced to lay them off, then we could go to potential customers and tell them truthfully and honestly that they would have our ‘A-Team’ working for them.”
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