In the oilfield industry, there is a constant debate on whether you should purchase or rent the heavy machinery you need to get the job done. Both have options have pros and cons, but if you are thinking about renting, here are four reasons it might be the right choice for your company.
If you are not planning to use the equipment for a long period of time, renting it is often more cost-effective than purchasing it outright. Renting also typically has a lower upfront cost, and you are skipping the long-term commitment. If you are unsure, however, a financial planner can help you figure out what the best move is for your organization.
When you rent equipment, that means you will be working with companies that offer a range of products and services. This means if you find yourself suddenly needing light towers, generators, access mats, or gas turbines, you have a relationship with a company where you can turn.
Oilfield equipment will need routine maintenance and make sure they are always up to code — it’s just part of owning these tools and heavy machinery. If you don’t want to incur those costs, you should consider renting over purchasing. As the renter, you will not have to worry about have the space to perform repairs or purchasing the tools that will be necessary to conduct the repairs. You also won’t have to worry about costly emergency repairs or about hiring the technicians that are necessary to perform repairs on this highly-specialized machinery.
In addition, most companies you rent from will work quickly to get any equipment up and running again so that you don’t lose profit or progress due to downtime. Also, the renting company will be responsible for making sure the rental equipment is always up to code, thus ensuring that your work environment is safe and injury-free from a machinery perspective.
- Tax deductions.
For some organizations, your heavy equipment may be tax-deductible — which will leave even more room for profit. Be sure to discuss this potential benefit with your accountant when deciding on renting or purchasing your oilfield equipment.
Ultimately, whether you decide to rent or purchase your oilfield equipment will come down to what is best meets the needs of your company. Starting with a pros and cons list, however, may help make the decision a little easier.