When Deep Well Services’ clients started talking about drilling higher-pressure gas wells with longer horizontal reach, they moved right into the Zelienople firm’s sweet spot.
“The jobs with the longer laterals … that has to be done with a snubbing unit,” President Mark Marmo said of the unique equipment his company uses to complete shale wells. “For the higher pressure, you need us.”
“It’s good news for us,” said Chief Operating Officer John Sabo.
Six years after starting as a well rig servicing outfit with two employees in Charleston, W.Va., Deep Well has found a niche in the expanding Marcellus and Utica shale markets, settling in Butler County last year. It’s the only snubbing company in Pennsylvania.
Revenue nearly doubled to $14.2 million in 2013 and is on pace to hit $27 million this year, Marmo said. Staffing levels climbed to about 125 workers, and Marmo expects that to eclipse 190 early next year.
The company picked up national exposure this fall when it completed what many called the most productive well in the Utica shale, a 10,825-foot-deep and mile-long well for Magnum Hunter Resources Corp. in Tyler County, W.Va. Its initial testing showed 46.5 million cubic feet of natural gas per day.
Officials with Houston-based Magnum Hunter did not return calls for comment.
“Their personnel seem highly trained with the right level of expertise,” said Dennis Degner, vice president of southern Marcellus operations for Range Resources Corp., which has contracted with Deep Well to complete wells. “The future really looks to longer horizontals, and Deep Well provides the equipment to do that.”
Deep Well is planning for more growth and the challenges that brings, Marmo and Sabo said.
“Finding talent can be tough,” Sabo said, echoing a common complaint among companies looking to hire Western Pennsylvania workers with training and experience in well services.
Deep Well has started its own training classes, modeling safety programs after higher Canadian standards learned from employees from that country.
“It’s a very dangerous job. You can’t hire garbage,” Marmo said.
The company is adding equipment to meet demand. It will get a second standalone snubbing unit with the power to pull 285,000 pounds of weight next month, and a third in the first quarter of 2015.
“These 285s are definitely the wave of the future,” Marmo said. “They’ll be fast and will add value.”
Cutting the time it takes to complete a well saves operators money as they struggle with smaller profit margins because of depressed prices.
Deep Well is further trying to make itself more financially attractive to well producers by partnering with other contractors to bundle services. A company can get Deep Well to complete the well, equipment from Louisiana-based Wellsite Rental Services (which rents space in Deep Well’s building), tools from Extreme Energy Services, and well testing from Vulcan Oilfield Services in one package.
“We can make it so they’re dealing with less companies and getting just one bill,” Marmo said.
Competition among oil and gas contractors is heating up as producers tighten their belts in the face of low prices. Major oilfield services firms Halliburton and Baker Hughes are merging. Cecil-based Consol Energy Corp. is cutting the number of suppliers it hires for coal and gas operations in half to about 1,500.
“We hope the competition doesn’t panic and drop prices,” Marmo said. “We can’t control commodity prices or regulations. But we can control safety, and that’s what we’ll focus on.”
That safety-first mentality is what companies such as Consol and Range Resources say they look for in contractors such as Deep Well.
“They have to share the Range culture of environmental stewardship, a good approach to safety and using the proper safeguards in all their work,” Degner said. “Deep Well has definitely demonstrated they’re willing to go the extra mile.”
David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or [email protected].