Discussion & Education
Produce More, Spend Less...Yeah Right!
We pride ourselves on providing expertly engineered plungers and lubricators and for 35 years we have been helping companies produce more from their wells while spend less money in the long term. “Produce More, Spend Less” is our motto, but often times that phrase is met with sighs and eye rolls. Our very own David Green is going to breakdown our business motto into more detail below.
Recently a Well Master representative visiting a customer saw one of our brochures with the “Produce More, Spend Less” tagline circled and next to that a handwritten “Yeah, right!!!”. Well Master’s premium plunger offerings (especially the Viper, Venturi and Jetted/Vortex Pad which are HZ high performers for example) have always been on the “expensive” side when compared directly with tools from other manufacturers, so this doubtful sentiment seems true! (And we want to respect the views of all of our customers!) But examining things a bit below the surface (pun intended!) of simple price comparisons shows a different story. Let’s take three views:
- Plunger price versus Plunger price: It is important to consider service life rather than simply the price of one item versus another. A $240 plunger that lasts 3 months costs $80 per month. A $360 plunger that lasts 6 months costs $60 per month. Which is really the least expensive option? Well Master Premium plungers typically last 2-3X longer than comparable “low-cost” plungers due to advanced metallurgy and unique design. Are you really operating at the lowest cost with cheaper tools? Divide the price by the service life in months to know your true cost.
- LOE or Lifting Costs: Often times, Management asks Operations to reduce “cost”. The simplest thing to think is to buy the least expensive tools. But first we should ask, “What cost are we referring to?” If it is the Lease Operating Expense (LOE) or Lifting Cost, then we should be sure how this is measured. Most often these metrics are based on Dollars per Unit of Production, ($/Boe or $/Mcfe). This changes things dramatically as now the rate of production is an important factor! If for any reason we reduce the rate of production, then the impact on LOE/Lifting Costs is to increase them. So, we could purchase a cheaper plunger, but if production goes down by more than the savings then our costs actually go up! Conversely, a more “expensive” tool that increases production can actually provide a significant decrease in costs.
- The Value of Production: As a general rule of thumb, we ask operators to think about the value of their production like this… A change of 10 mcf/d equates to about $10,000 per year. A change of 1 bbl/d of oil or condensate equates to about $20,000 per year. A plunger, or operating practice that contributes to these production changes, or multiples of them, can add or take away enormous value! If we “save” about $500 per year by purchasing cheaper tools for one well but give up 10 mcf/d and 1 bbl/d, we lose nearly $30,000 per year!! If a plunger (like our Horizontal-specific tools) increases production then the total gains can be spectacular.
In summary, the actual price differences between plungers is virtually insignificant when other factors are considered. A better performing plunger “Produces More”. A plunger that lasts longer “Spends Less”. A plunger that “Produces More” lowers LOE/Lifting costs and further “Spends Less”.
Produce More, Spend Less — Yes!!!! Right!!!!