Dear Andy: How can my company survive at sub $50 oil?

Dear Andy:

“My name is Pablo. I’m the President of a privately held junior oil and gas operator based out of Houston, Texas and I gotta tell ya, these low oil prices are killing us. I’ve tried everything under the sun to reduce costs, including hiring ‘cost reduction consultants,’ but we’re still bleeding cash left, right, and center. Do you have any ideas that can help my company get back in the black?  Begging for help, Pablo R. 

Dear Pablo:
Okay here’s the deal. First of all, stop hiring cost reduction consultants, because those guys are about as useless as Matthew McConaughey’s t-shirts. The entire industry is suffering, but the key is that you’re company is relatively small and privately held, and those facts will allow you to navigate through this downturn in creative ways without needing approval from any board of directors. Over the decades I’ve worked alongside big and small companies alike, and I know a thing or two about saving money.

1)  Just a Little Off the Top – I’m sure you’ve heard of penny skimming schemes whereby hackers access financial systems and redirect a penny here and a penny there to an offshore bank account unbeknownst to the account owners. Okay, well, take your CFO out for a drink and convince him to implement a similar system, but this time, reduce the salary of each one of your employees by 3 or 4%. It’s really that simple. A recent study reported that 99.99% of employees do not manually calculate their net salary every 2 weeks, or look at their paystubs, so the odds that you get caught are slim to none, and slim just skipped town.

2)  Savour Child Labour – When you are ready to hire again, hire your children, or have your staff hire their children. If they are at least 14 years old and pay their own taxes, it pays to take advantage of their lower tax bracket. You can essentially transfer income from your business to them and reduce your overall tax burden.

3)  Get to Steppin’ – Developed by non other than the 2P News staff and unveiled at the 2013 Renewable Energy Expo in Nevada in 2013, PowerPants® generate electricity by the simple motion of walking. Purchase a pair of pants for all of your staff, including field operators (shoot, we’ll give them to you at no cost if you tell people about 2P News). The idea is that the electricity generated by your people will offset your electrical utility expenses. If you get those lazy operators off their duffs and have them run to wellsites instead of taking their trucks, you might even be able to sell some electricity back to the grid.

4)  Rewards, rewards, rewards. – Who says rewards points are only for end consumers. Pay for all of your company’s operational budget (and perhaps even more) with a cash back rewards credit card. Do you know how much money you would get back @ 2% on a $500 million capital budget? Neither do I, but go calculate it. But the tricky part about this method is having your bank increase your personal credit card limit to over $500 million.

So there you go, Pablo R., all the best. And if these techniques don’t work for your company, then perhaps our readers will suggest their own means of saving money in the current oil and gas industry slump.

Andy Killinger, Staff Counselor 2P News