The owner-operators of an established service rig company, Jonathan and Tyler Kmita, are 鈥渃autiously optimistic鈥� about the future of the oil industry in the southeast 鈥� but only if there鈥檚 a change in government in October.
The brothers are carrying on the business of John Kmita Ltd., located on Highway 13 just east of Weyburn, with a fleet of service rigs that includes a brand new rig they bought over the winter from their supplier in Leduc, Alta., after retiring their rigs No. 1 and 2.
鈥淲hen we decided to build a new rig, we were done paying for Rig No. 5. Rig No. 4 was built in 2009-10, which we got in the last part of the downturn at the time so we could save a little money,鈥� explained Jonathan. 鈥淪o with the new rig, we thought it was a good time to upgrade our equipment, and the original rigs, No. 1 and 2 got retired.鈥�
Their late father, John, bought those two rigs in 1966 and 1969 respectively to start the company off, and as Jonathan pointed out, they have essentially the same equipment as the new rig, such as the draw works, but with not as many bells and whistles.
He admitted it was 鈥渁 bit of a gamble鈥� when they spent the money to buy a new rig, but noted part of the success of their operation is to maintain a low debt load that helps make such a purchase possible.
鈥淚t鈥檚 kind of steady right now, but not too busy. I guess we鈥檙e fortunate enough with the clients we have, that we鈥檝e stayed working,鈥� said Jonathan. 鈥淚n the southeast, we鈥檙e somewhat isolated from Alberta, almost like we鈥檙e on our own island. We seem to roll along better than other locations.鈥�
While the Kmita rigs have been working, the offsetting factor is that with the downturn going on over four years now, the prices paid by oil companies has dropped by 30 to 35 per cent from what they paid during the boom time.
鈥淣o matter what industry you鈥檙e in, it鈥檚 hard to manage a 30 to 35 per cent cut,鈥� he said, adding of the cyclical nature of the oil industry, 鈥淚t鈥檚 the nature of the beast. We rode a pretty good wave for a while.鈥�
Part of the cause of the ongoing downturn is 鈥渢he political climate federally鈥� which has been hurting the oil and gas industry, particularly with the inability to get any pipelines built.
The opposition of many groups to the pipelines is misplaced, and many people are misinformed about what is involved with the industry, said Jonathan.
鈥淭hey don鈥檛 realize how dependent we are on fossil fuels,鈥� he said, pointing out the demand for fuel and products made from petroleum is not declining but increasing.
He also noted that projects like the Energy East pipeline was stopped by opposition in the East, and yet they bring in millions of barrels of oil from Saudi Arabia, where the labour and environmental standards are at a far lower level than the standards set for the oil produced in Canada.
Jonathan added that this region, which includes the Bakken formation, has the third largest reserve in the world, so it鈥檚 difficult not seeing as much work going on as there should be.
With the price of oil in the range from $62 up to about $70, 鈥渋t鈥檚 been brutal, no matter who you鈥檙e talking to with the downturn going this long. It鈥檚 been four and a half years already. Nobody thought it would last this long,鈥� said Jonathan, noting some companies like Weatherford have gone into bankruptcy as a result.
鈥淵ou try to learn to plan in the good times, and you try to keep the debt load down,鈥� he said, adding they also try and keep their service rigs maintained and in good repair, because when a job comes around, 鈥測ou can鈥檛 work when you鈥檙e broken down.鈥�
The other key to longevity is diversifying one鈥檚 business so you can keep working.
鈥淚t鈥檚 a tough balancing act,鈥� said Jonathan.
鈥淲e take care of the guys at work, and them time in the shop,鈥� added Tyler. 鈥淚f you don鈥檛 have a good crew, it鈥檚 kind of tough to go to a job. Dad always insisted that we treat our guys right.鈥�
鈥淚t takes a good men to run a good crew,鈥� said Jonathan, who laughed and passed on another saying that their dad always said, 鈥淕ood service doesn鈥檛 cost, it pays.鈥�
Tyler noted that treating their workers right pays off in the long run, and said next year they have two employees who will have been with the company for 25 years.
