To Refurbish or Not to Refurbish: That is the Question

O&G companies across the board have been scrutinizing and rethinking their strategies to survive in today’s challenging market. Due to the considerable decrease in active rigs, alternatives to new-builds are being evaluated to optimize drilling productivity without exceeding budget parameters.     

Decision-makers must thoroughly understand the benefits and risks of each alternative to determine their ideal course of action. At times, conventional ways of thinking are not completely true with the ever-evolving nature of our industry.  For example, it is important to understand that new and refurbished equipment do not always have substantial differences in regard to added-value. 

New vs. Refurbished Equipment
Although new equipment often touts the latest technology, refurbished equipment has typically undergone rigorous testing and inspection specific to the intended environment. Refurbished options can actually trump new equipment in multiple aspects other than cost.  

Below are three primary comparisons that are commonly explored – physical condition, testing, and warranty.

Physical Condition  
A combination of both aesthetics and operational function, physical condition is often the first thing we inspect with our purchased equipment.

  • Refurb: Existing equipment is serviced, cleaned and freshly painted. There is likely little, if any, physical indication that the
    equipment has been refurbished at all.
  • New: This is a no-brainer; obviously, new-builds should have impeccable physical condition.

Both equipment options undergo similar Factory Acceptance Test (FAT) processes before delivery. However, even after passing the FAT with flying colors, other issues can arise in the field. 

  • Refurb: In addition the FAT, refurbs are rigorously tested to ensure they reliably operate as promised. In fact, most refurbished
    gear is function-tested multiple times (e.g., when it arrives at the refurbishment company, during the refurbishment process, 

    and again before it ships to the customer). Moreover, a refurb has usually undergone many field hours where it has already
    proven itself and operational kinks have been 
    worked out.
  • New: After a new-build is manufactured and has completed the FAT, it heads out to the field to prove itself over time. Because 
    the equipment is brand new, potential “teething problems” could surface that were not picked up during the testing phase. 
    This could be due to many different factors that cannot be fully simulated during testing.

This one is a biggie when it comes to the differences between used equipment and new equipment.

  • Refurb: Although high-quality refurbishing services should include a strong warranty, it will likely never match the warranty
    provided with new equipment.
  • New: There’s no question that newer equipment comes with higher price tags and matching warranties.

In summary, refurbished equipment (from a reputable source) is a very viable solution when new equipment costs outweigh their added-value. Budgets can be stretched without sacrificing quality or reliability by strategically refurbishing existing pieces. The key is to understand the benefits and potential risks when assessing alternatives. When appropriate, these cost savings are highly beneficial as we ride out this challenging market and wait for oil prices to rise again.

Before & After Refurbishment

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