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Monday, May 01, 2006

Hobbs Firm Benefits From Soaring Oil Prices


Associated Press
      HOBBS — As oil prices hit record highs, at least one southeast New Mexico company is poised to benefit from a demand for oil rigs.
    Randell Ford, a partner in Permian Drilling LLC of Hobbs, said the operators he works for are desperately trying to find rigs.
    "Southeast New Mexico is just a really good market for drilling rigs and well-servicing rigs,'' he said.
    With the energy industry enjoying a long stretch of high prices and hitting a record high above $72 per barrel April 19, Permian Drilling is in an enviable position.
    Ford said when the oil and gas industry was suffering in the 1990s, he bought as much used equipment as he could find at dirt cheap prices.
    Ten years later, Ford's equipment is serving as the foundation for Permian Drilling, which assembles drilling rigs from used parts and drills wells for oil and gas companies.
    "We have enough equipment to build five to seven more rigs, and I don't know of anybody who has that much equipment in the Permian Basin to build that many rigs,'' Ford said.
    After only one year in business, Permian Drilling has about 40 employees and hopes to double that number by the end of the year.
    Chris Williams, district supervisor for the Oil Conservation Division's Hobbs office, said drilling prospects started increasing soon after the price of oil and gas climbed a few years ago.
    "Because some of the areas that would have been considered marginal before now can be produced,'' Williams said. "The price is high enough that it makes them economic.''
    The number of wells being drilled in Lea County is rising from 297 new wells drilled in 2003 to 419 wells drilled last year.
    Bob Gallagher, president of the New Mexico Oil & Gas Association, said similar increases in oil and gas well drilling is occurring nationwide and is a result of price increases for oil and gas.
    Although other drilling companies have been adding rigs and hiring more employees, Gallagher said he's not aware of any other startup companies in New Mexico.

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