An oil and gas operator explains why undercapitalized companies fail. A $100,000 repair on a well that makes $30-40k monthly can force months of downtime and personal bankruptcy. Operators who spread thin across too many wells and ignore their best assets will lose them.
its daily production levels, whether it's oil, gas, or water. You never know if you have a tubing leak, a casing leak, or you parted rods. And then say you can't get a rig at the time, and then you go on without that production for a few months. You get a little bit behind on bills, and if you're not well capitalized, you don't have the money to go back in there and spend $100,000 to turn that well back on that makes $30,000 or $40,000 a month. You know, it's, people have to sell off cars, sell their homes whenever they fall on hard times all the time. It's no different in this business, you know, and if they're too spread out and they're not paying attention to their main profit centers, they let 'em go to the wayside, you know? So a lot of opportunity gets created through these cycles as well. So, you know, if something breaks and say oil is $40 a barrel, you know, can they afford to fix it and wait? 8 months to see that capital back, uh, instead of 4 months to see that capital back on the repair, they might not be able to afford to wait.
