Service & Supply | Oilfield Services
ESP Tweaks Business Strategy; Cites Lull in Frac Activity
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ESP Resources Inc. has reported an update on its business and operations.
David Dugas, President & CEO stated, "Our business has experienced significant changes over the past six months as we have shifted our strategy toward domestic operations and away from our costly international business development. Without any expected near-term revenue from these international endeavors, we had to significantly trim our overhead and refocus our efforts on our existing production petrochemical business. In addition, a slowdown in fracking activity by certain of our customers in and around our district office in Arkansas and their shift to other shale regions caused our completion petrochemical business to dip significantly. We are now recapturing that completion petrochemical business, but do expect it will take some time before we can see elevated levels.
"As we continue to refocus our sales efforts, we are making significant operational and structural changes to lay the groundwork for our future."
The Company has implemented the following operational changes during 2013:
- Operating personnel has been reduced from 55 at the start of the second quarter to 36.
- Payroll has been reduced 39% since April of this year through reductions in personnel numbers and salary adjustments of current personnel.
- Reductions in excess vehicle inventory have resulted in reductions of insurance monthly costs and vehicle carrying costs. To date we have sold 10 of the 18 vehicles that we had for sale.
- Chemical inventory has been reduced and streamlined from a turnover of six months on hand to now four months on hand resulting in decreased inventory carrying costs. This will continue in the third and fourth quarters with a goal to reduce to under three months on hand by the end of the year.
- The Company's sales efforts for the last 3 months have generated increased revenues from organic customer growth in South Texas (Victoria and Pharr districts) in the Eagleford shale trend. We plan to continue these efforts in the third and fourth quarters.
- Payroll costs have been reduced amongst senior management via salary cuts in order to share in the cost reductions being implemented company-wide.
- Sale of excess and non-performing assets and equipment began in the second quarter and will continue into the balance of 2013, resulting in reduction of monthly payments and interest expense.
The Company is implementing the following structural plans for the future including the following:
- The Company is currently working on strategic investment opportunities with a significant monetary foundation to execute a new and improved core business strategy and a rededication to core business strength and new expediential growth model.
- The Company is currently in discussion with several highly-seasoned and industry experienced executive management candidates to strengthen our operational team.
- As part of the restructuring plan, the Company has committed to the development of a sales strategy with the intentions of new sales personnel and a revised sales campaign to increase its customer base, industry exposure and increase revenue opportunities.