Yellowjacket Oilfield Services shows the O&G service and support industry how successful rebounds are done
For the oil and gas industry, 2020 marked the single worst collapse since 1985, spurred by a perfect storm of the disintegration of the OPEC agreement, the Russia-Saudi oil price war that ensued in its wake, and a global pandemic. In the oilfield service (OSF) industry the superstorm swept many players off the board and pinched the pain points of survivors to the point of agony.
At Houston-based Yellowjacket Oilfield Services, that profound discomfort was an invitation to dare. Since its purchase in 2015 by Lacy and Dorothy Harber, Yellowjacket has grown organically and through mergers and acquisitions, operating with the Controls and Procedure standards found in public companies combined with the speed and sagacity of a privately held enterprise.
A 60-year industry vet, Lacy Harber is a source of that acuity, leveraging deep pockets and a sharp eye for the fortuitous opportunities that disruption brings. As competitors fell to the wayside and the remaining players struggled to shake off the ultimate existential crisis, his latest venture surged forward.
In mid-2020 the demand for their services plummeted – and jolted their competitive drive to new heights. “We adjusted to those challenges and aggressively invested in equipment and people,” company CFO Guy Roberts explained. The 2021 purchase of Axis Energy Services’ coil tubing line is one such investment.
“Many of these coil tubing businesses found it difficult to make any money, so they sold off their assets. For example, we could buy a fleet for cents on the dollar of original cost, but we still need to invest big to have the equipment brought up to state of the art operational standards,” he added. Since January of this year, they’ve invested upwards of $20 million into the new business line, creating many new jobshiring the best talent and have raised monthly revenue from the coil side of the business from zero to a projected $5 million plus per month going forward. Energy Independence is on most observers’ minds today, given the recent political landscape, and we like to think Yellowjacket is doing its part in creating a more sustainable, reliable energy future.
Yellowjacket operates within a geographical footprint extending from South Texas to Alaska and the North Slope and across to Louisiana with over a dozen bases and 370 workers. Three core business segments define the firm: fishing and rental, wireline, and coil tubing services.
For those unfamiliar with fishing, it’s much like it sounds. When equipment is lost down a well, specialized equipment and workers known as fishermen are needed to recover it. Yellowjacket prides itself on having one of the largest fleets of fishing equipment in the country. Coil tubing is essentially a continuous reel of narrow, cylindrical pipe used in many oilfield applications including well work. Wireline services utilize single-strand or multistrand wire to provide downhole data as well as deliver pipe recovery solutions. Yellowjacket offers a suite of wireline services for both land and offshore markets, such as their Wireless Integrated Pipe Recovery System (WIPR), which provides offshore customers multiple pipe retrieval options resulting in substantial time and cost savings versus conventional options.
The advantages of private ownership
By mid-2020, the company was hiring again, quickly rising to pre-pandemic levels of employment.
The need to bring the workforce up to strength is linked to Yellowjacket’s aggressive M&A strategy. Over the past two years the company has made a number of acquisitions in addition to the coil tubing business. “Lacy Harber recognized the need for and the benefits of acquiring them and tapping into those synergistic opportunities,” he added.
One of those complementary alliances came with the acquisition of Peak Fishing Services, respected specialists in solving difficult cased hole and open hole fishing challenges. The small operator was feeling the effects of the recession, like everyone in an increasingly challenging segment of the oil and gas supply chain.
“When things are bad, and you're the one holding that piece of metal that cost $1 million,
if it's not put to work, you're going to be in financial difficulty fairly quickly,” Roberts pointed out. Acquiring a company that has a great reputation with their customer base, and skilled, respected workers, as Peak does, and giving them the ability to access the formidable Yellowjacket fleet of equipment is a sure revenue booster.
Yellowjacket has the largest selection of fishing and complementary tools for each of their product lines. In oilfield services, the ability to respond is a robust value proposition, and every growth move the organization makes reinforces that.
As Roberts put it, “Complications that impact the flow rates for oil and gas reserves are very expensive for the operators. If there's an issue and the well shuts down, that is highly expensive for them. We're there to solve those problems in a timely and effective manner.”
A key advantage for privately owned operations such as Yellowjacket is speed. A flat management structure allows decisions to be made at the pace of change. Roberts, a veteran of Baker-Hughes, appreciates the acceleration. In large firms, he said, “If you have to make an investment then there's a chain of command that it has to go through to get a decision on it. We can make the decision in a matter of days.” This end result is efficient cost-effective solutions that consistently benefit our customers.
Hilcorp, one of the largest exploration and production companies in the U.S., is a premier Yellowjacket customer working in Alaska. The oil crisis drove the exodus of several service providers from the state, so Yellowjacket doubled down their support and is keenly picking up the slack.
“We are very loyal,” Roberts asserted. “We really do care about our customers and what they need.” That includes investments in equipment that a particular customer might need.
In addition to the ability to partner with customers such as Hilcorp, being privately owned has enabled the company to reinvest their profits into their employees and a QHSE organization that rivals those of much larger, publicly traded enterprises. A 17-member team with over 100 years of oilfield experience guides these efforts.
As a performance-driven company, Yellowjacket’s systematic approach to QHSE management highlights their greatest responsibility, which is the health and safety of their people.
Technology also has a significant role in their safety practices. For instance, they have invested in a vehicle monitoring system to keep drivers safe. “That wouldn’t be terribly unusual for larger publicly traded companies, but for a private company, we're showing we're putting our money where our heart and our mouth is,” Roberts said.
By design, Yellowjacket’s company culture is driven by a “no compromise” commitment to safety and quality and focuses on having the best quality tools and the best service quality in the marketplace. Each product line has a designated expert with the technical knowledge and experience required to meet their high standards.
“It’s becoming more and more important for OFS companies to have a quality program,” Roberts said.
When the firm is audited by large existing or potential customers, they can confidently demonstrate that they have the systems and processes in place to guarantee that they are delivering safe, reliable, and clean services.
Part of supporting that commitment means generating conversations around sustainability and exploring the necessary steps toward making this a reality. Preserving local communities is essential to the growth of a privately owned business, and Yellowjacket understands the significance of investing in their longevity by embracing emerging technologies that results in more efficient processes and a reduced ecological footprint.
Another benefit of private ownership is the democratization of opportunity. Every Yellowjacket employee has a voice and access to all levels of management and is encouraged to help drive the business forward. “Anybody can come up with a good idea that can very quickly go from just being an idea to being implemented in a very short time.”
Roberts concluded, “We have a saying: Yellowjacket is here today, Yellowjacket will be here tomorrow. Companies often run into trouble, but because of our owner and his commitment to Yellowjacket, we've weathered prior storms, we've weathered this one, and he's fully committed to supporting the industry for the foreseeable future.”
Our Mission: Providing Superior Services with Cost Effective Solutions
Lacy J. Harber began his 60-year oilfield career working for G&L Tool Co. His early drive for results led him to purchase the same service line years later with the goal to expand it to one of the largest oilfield service companies in the country. Mr. Harber is dedicated to investing in state-of-the-art equipment and the best resources available to deliver unparalleled quality and service to our customers.