Given the increasing need for energy, the energy industry has been growing a lot over the recent past. Such is an indication that the energy companies have a different level of income. Most of the well-established companies have bought oilfield equipment and might not require to rent. However, startup companies are growing the business and, therefore, torn between renting or buying the equipment. There are plenty of reasons why oilfield equipment rentals are the best option for energy companies.
Why should you rent oilfield equipment?
Renting oilfield equipment enables a company to spend a small amount of money compared to the huge price that could have been spent purchasing the same equipment. Most of the oil equipment requires a company to part with a huge amount of money while purchasing it. Most new companies in the energy industry operate on a tight budget and might not have the money to buy all the necessary equipment. Therefore, renting turns out to be the better option since it requires a low upfront cost.
Oil equipment requires a lot of maintenance to ensure that it is always in good condition. Such indicates that a company would require money to buy the equipment and require occasional maintenance funds. If a company operates on a tight budget, it might be challenging to afford the cost of maintaining the equipment. Therefore, renting is the best option for them. The oil equipment owner is entitled to ensuring that the equipment is in good condition before renting it out. Hence, an organization will not be required to pay any maintenance cost for rented equipment. In the long run, renting oilfield equipment is cost-effective.
Oilfield equipment might only be required on a short-term basis. Therefore, it is better to rent it for a specific period since it is cost-effective. Buying it would not be necessary for such equipment because it becomes useless once the intended task has been completed. Renting is an effective way of acquiring equipment for companies working on a project expected to take a short period.
Another important aspect of borrowing oilfield equipment is that the company will not have a long-term commitment. Once the project is over, the organization should return the equipment. As a result, it will not require a lot of storage costs. If the company chooses to buy the equipment, they would be required to store it safely—such means extra costs for storing the equipment and hiring people to guard it. If the equipment is rented, the owner is likely to provide storage services.
Oilfield equipment rentals that energy companies can use to save on the cost could have spent on buying new equipment. A company should estimate the cost of buying equipment versus renting it to make the right decision. In some cases, purchasing the equipment might be the best decision. It all depends on the timeframe of the project and the availability of funds. However, renting is known to be cost-effective, especially for new companies in the energy industry.