The Year in Review
"Business was good." We asked drilling contractors across the nation to review the market of 2001, and this echoing positive feedback seemed to encapsulate the year well. Some of the more fortunate ones even claimed it was the best year they've ever had. And while business may have slowed down during the past few months due to September's tragic events and the sluggish economy, the majority of contractors claim they have more than enough work to keep them busy for the foreseeable future. So, we present yo u with a review of 2001, also sending our best wishes for a safe and successful 2002.
Vacation Homes Bring Booming BusinessOut in breathtaking Jackson, Wyo., vacation homes have been keeping Weber Drilling Inc. pretty darn busy this year. Owner Jack Weber says, "We've been swamped - business has been very good. The thing that keeps going on here is that they're building these huge vacation houses with pond wells and pumped water all over the place, which has been going on for the last five years."
The amount of water that these homes needs is definitely beneficial for Weber's business. "These are $6- to $10-million homes h ere with 12 to 14 bathrooms, which takes a lot of water," he explains. "We have houses we drill seven wells for - a house well, an irrigation well, pond wells and the list goes on and on."
To a lesser degree, also impacting Weber Drilling's business w as the drought that many Western states endured. "We had a lot of wells around the country drying up that we've had to replace or deepen or whatnot, which is always an emergency situation," he says.
To help keep all of this work sorted, Weber says his company made some changes to its bookkeeping practices. "I've got two sons who work in the business, and we brought my daughter in a year ago," Weber explains. "She's been doing the books and has upgraded and put everything on the computer now. That's been keeping our billing more up-to-date."
Asked about business in the future, Weber speculates, "I don't think we're going to have the carryover of work from this year to next year that we did last year. I think it is slowing down." However, he remain s positive, saying, "We shut down in the wintertime, but we're still getting calls for wells. These people are crazy - they don't quit anymore. It looks like unless we have a horrible downturn in the economy, the people here will keep building."
Gearing Up for Next Year's GrowthLooking back at 2001, Ron Gill (Ron Gill Well Drilling, Chestertown, N.Y.) reports, "Business was good - probably a little bit better than the previous year." Asked what factor had the most impact on his business, Gill replies, "I think the drought had a lot to do with it; we've been in a deficit rainfall situation for quite a while - maybe the past 10 years. That's the main thing that is keeping things busy; if not for that, I think 2001 would have been a slower year that it has been. While much of the country is in some kind of slowdown, we haven't seen that here yet. We're up in the mountains so we're behind the trends. We're always a bit behind in the pickups and behind in the slowdowns."
In an effort to expand his service offerings, Gill explains that, "We added some capabilities this year that we didn't have in the past. We bought some specialized equipment, previous to 2001, but this year we developed some abilities with that equipment to do things we couldn't do with the big rigs."
As for impact from the terrorist attacks, he tells us, "If anything, it appears there may be a little bit of a boost coming possibly because people are concerned about having another place to go in the event of another attack. That may or may not translate into more work next year."
Mission: AccomplishedGary Coonse (Coonse Well Drilling, Eagle, Idaho) set company goals high this year. "Our expectations were to drill as much and to put as much pipe in the ground as we could, and to satisfy as many people as we could," he relates. "As the year turned out, I couldn't have hoped for a lot better year than what we've had. We're a small company - there are five people who work here and we do about 125 wells a year. We've probably already done our 125 wells this year. We've pretty much met our expectations."
Of course, the success didn't come without obstacles. Coonse says, "The cost of fuel definitely had an impact on our profit margin this year. Also, we've had some ongoing legislation - we're in the middle of our standards this year - and that has taken some time."
Other potential hurdles merited some attention from Coonse, as well. "It seems as though the environmental issues in our area have softened some, but there's always concern about how much of an impact the environmental aspects are going to have on us," he explains. "I guess one of our biggest concerns, too, are the pipelines. They seem to be broadening their area each year in our valley. We're still doing a lot of work, and they haven't hit home yet, but with the spread of them, I'm sure they're going to have an effect."
Even when facing these challenges, Coonse encouragingly says, "Of course you're always worried a little about the economy, but we really are trying to grow. We're still pretty darn busy. We've had a year as good as last year, maybe better. Our business does seem to grow a little each year."
Staying Strong and SteadyCustom Drilling Service in Lakeland, Fla., is an environmental drilling firm. "Generally speaking, we've stayed pretty well busy," notes Wayne Smith. "Most quality contractors around here are scheduled a couple months out; that's about normal for the past couple years here in Florida. Certainly there have been times in everybody's history when things are more week-to-week, but lately, the scheduling has been staying pretty well out there. Things are relatively stable year-to-year now. We have a fairly small client base with regard to the environmental business and it's been strong and steady."
Echoing what many in the industry report, Smith says, "Something that's becoming increasingly difficult is finding labor - both skilled and unskilled. Unskilled labor might be a little bit more available here in the next 12 months because of the economy but finding skilled labor almost is unheard of these days. You have to bring in unskilled people and train them. This is the thing that's having the biggest impac t on our business. We could do quite a bit more business if we had more help."
Asked if the economic and political events of the past year have had much of an impact, Smith replies, "On the environmental side of drilling, dollars typically are spent on both assessments and remediation regardless, or nearly regardless, of whatever else is going on in the world."
Regarding capital investment, Smith remarks, "Actually, this is the first year in some time that we haven't bought a boatload of equipment. And that's nice; it certainly helps cash flow. We even have a drill rig that we'd like to sell."
Pleasantly SurprisedJames Hutmacher (Hutmacher Drilling Inc., Chamberlain, S.D.) admits that during this year, "business was better than I really expected it to be. I thought we were going to have a pretty dry year, and I kind of expected us to be busy, but I wasn't sure how long it was going to last. We were busier earlier - we've still got work to do, but it's starting to slow down."
What helped to make this a good year for Hutmacher Drilling? "There were really two things that affected us," Hutmacher explains. "We had a drought area - part of the area we cover was kind of dry. And livestock cattle prices were up earlier in the year - the feeder calf market was up - and when farmers have money, they spend it."
One highlight of the year for Hutmacher occurred on a job site. "We pulled into a place where my competitor drilled a well a year or two before, and it was just barely flowing," he recalls. "They had a pump set at 500 feet and it was hardly pumping. We came in and drilled a well and took a 60-gpm flow out of it."
A Great Family OpportunityThis year provided Bill Myers (Flagstaff Well and Supply Co., Flagstaff, Ariz.) with a special opportunity - he got to work with both his son and his father. "My most memorable experience was when my oldest son worked along with me in the business this su mmer," Myers relates. "My father is still drilling wells in Arizona, and we have had the opportunity to do some great jobs together. Having three generations of your family working together is quite an experience, and it is great to see Grandpa passing o n experience and talking about the 'good old days' to the new generation of drillers."
However, it wasn't just the summer that was great for Myers; as a whole, he enjoyed good business during 2001. "Business was probably up 10 percent this year, and m o s t of the work was done in new homes construction," he says. "Our expectations going into 2001 were continued growth and acquiring some new equipment, both of which were accomplished."
The company also was pleased with a new technological toy it pu r ch as ed. "The technological tool that we invested in this year was a map and locator service for our computer," Myers explains. "These maps, as well as being able to access well logs from the Arizona Department of Water Resources registry program, mak e e sti mat ing wells in an unfamiliar area much easier. You can see the terrain from the maps and locate an area in the field with GPS, then use the registry to look at all of the well logs in this section. It has been a great help."
What does 2002 ho l d f or M yers and his company? He tells us that drillers in his state could see some surprising changes in the future. "In Arizona, the governor appointed a committee to alter the ground water law in Arizona, which could have a major impact on some of the dri lling areas in the state," he reports.
Fortunate YearIt seems that Emil Worm should count his lucky stars that he made it through this year unscathed. "Our rig was tipped over and I was right behind it," he recollects. "That was something I won't forget."
Other than that scary and unfortunate incident, Worm says it's been a pretty favorable year for his company, LO Lynch Quality Wells and Pumps, which is located in San Jacinto, Calif., a community situated 80 miles east of Los Angeles. "Business has been good. I think in this area, some of the existing wells were drying up and some of the wells have been slowing down, so we've had to re-drill some of them," he recounts. "It also seems that there are more people moving out here from the city."
In fact, LO Lynch has done well enough this year to allow the company to expand. "We added another drill rig," Worm explains.
Worm admits that work has subsided a bit recently, but he doesn't seem to think the factors causing the slowdown are grounds for too much concern. "We increased the size of our business, and it always takes a little bit of time to recover from that," Worm says. "Also, after Sept. 11, there was kind of a lull in calls for about two to three weeks, but we still had plenty of work already inflated. Then again with this anthrax thing, I think that it's made an affect and work is kind of slowing down, but that's a relatively normal thing coming into the holidays and wintertime."
Even with the current sluggish economy, Worm seems to remain fairly optimistic and says there may be some help for drilling companies in the future. "It looks to me like the government may do something for a stimulus package, which would help us out a lot if they would do a tax cut," he says.
Cautious OptimismAE Drilling Services Inc. in Greenville, S.C., primarily is an environmental contracting firm. Company president Mark Lassiter reports that business was good in 2001 - actually better than expected. "Large DOD projects continued to develop, requiring extensive drilling," he explains. "An industry trend to in situ remediation resulted in a number of drilling-intensive injection projects." Lassiter reports that exploration and injection via direct push continued to grow, and that landfill and pipeline work remained strong, as well as geothermal projects. He says, "The newfound emphasis on the war machinery may well result in a decrease in activity in the environmental arena; this remains to be seen. We enter 2002 uncertain as to the market's strength, yet we remain optimistic."
'The Best Year Ever'"This definitely was our best year ever," beams Todd Mount (Mount Water Well Drilling, Heath, Ohio). "I didn't know it was going to as good a year as it was. I was a little tentative at the beginning of the year because of the stock market," he explains. "And the year did start out slowly. January through April always is the slowest time of the year - not only because it's winter, but also because it's the time between Christmas and tax returns, and people have less money then. But it's more than made up for that since then. I don't think it was that way all over the country, but we're in an area here near Columbus that just seems to be booming; there's a lot going on."
Asked about trends he's observed lately, Mount tells us, "One of the things that's been happening is people wanting quality water systems. They're more water-conscious and they're willing to pay for it. In years past, often the cheapest guy out there got the job, but I don't think that's the case anymore. We've raised our prices and it's done nothing but help us; we've got more work than we've ever had. Customers are willing to pay for it if they can get what they want."
Commenting on the impact of the events of Sept. 11, Mount says, "If anything, our business has picked up and I'm not certain as to exactly why, but I think a lot of it has to do with the low interest rates right now - there's definitely an incentive to build right now."
Always looking to expand and take on new things, Mount's firm bought some more equipment this year and it turned out to be a big plus. Mount relates, "It seems that whenever you buy a new piece of equipment, you wonder whether it's going to pay for itself. Every time I've bought a new piece of equipment, that doubt went away pretty quickly because we'd always find need for it. This year we bought a bigger service rig and I wondered if we were going to be able to support it. That rig is running practically every day."
Reaching Higher"Generally, 2001 was good - pretty much flat from last year," reports Jim Layten (Kickapoo Drilling, Downs, Ill.). "Our area's biggest employer has plateaued and the local economy reflects that, but we've been busy all year long." Kickapoo operates in a r ural-type setting, but one that is seeing increased development, and that bodes well for the immediate future. Layten points to an increasing consumer awareness about water quality as a benefit to business. "But a big problem we have in this area is a lac k of qualified labor. We've been in hiring mode for the last two or three years." And Kickapoo updated its computer system this year.
"Our plan for 2001," Layten explains, "was to increase our gross receipts but that hasn't happened to date. Some of th e jobs we took on didn't turn out as profitable as we had hoped. The work was there and it's still here in front of us but I'm afraid winter is going to get to us first. It's been a profitable year, just not as good as we hoped we could make it be. And it goes back to the labor issue. The crews that you have on is all you have to work with and you can only push them so hard."
Reflecting on current events, Layten says, "With interest rates so low, we've seen a few people move on projects this fall that were originally planned for next year. Not a lot, but some. As an industry, we should get together and take this opportunity to let people know how safe their private wells are. We water well contractors are an independent bunch but we need to band together. That would help us tremendously."