At 6:40 on a Monday morning, the lease operator at Mesquite Draw found three compressors down. They had gone down Saturday night. Nobody wrote down when.
Mesquite Draw runs 40 rented compressors across a Delaware Basin lease under a 98.6% runtime guarantee. That month the fleet ran 92%. When the vendor's invoice arrived, the operations manager asked the obvious question: what are we owed?
The number on the invoice
In a 31-day month the guarantee allows the fleet 417 down hours. At 92% runtime it was down 2,381. The credit for the excess came to $12,408. That is the number most operators chase.
Show the mathHide the mathHow each figure above is worked out, step by step.
Deferred production$1,302,000
- Hours in the month31 days × 24 h744 h
- Down unit-hours40 units × 744 h × (100% − 92%)2,380.8 h
- BOE deferred: still in the ground, not sold this month2,380.8 h × 175 BOE/d ÷ 24 h17,360 BOE
- Deferred production17,360 BOE × $75$1,302,000
Rent on idle units$15,040
- Hours in the month31 days × 24 h744 h
- Down unit-hours40 units × 744 h × (100% − 92%)2,380.8 h
- Rent per unit, per hour$4,700 ÷ 744 h$6.3172
- Rent paid while units sat down2,380.8 h × $6.3172$15,040
Credit owed$12,408
- Hours in the month31 days × 24 h744 h
- Down unit-hours40 units × 744 h × (100% − 92%)2,380.8 h
- Down hours the guarantee allows40 units × 744 h × (100% − 98.6%)416.6 h
- Down hours beyond the guarantee2,380.8 h − 416.6 h1,964.2 h
- Rent per unit, per hour$4,700 ÷ 744 h$6.3172
- Credit owed1,964.2 h × $6.3172$12,408
The number that was not on any invoice
Each unit moves about 175 BOE a day. At 92% runtime across 40 units for 31 days, 17,360 BOE stayed in the ground instead of crossing the sales meter. At $75 a barrel, that is $1,302,000 of revenue pushed out of a single month, 105× the vendor credit.
We were arguing over twelve thousand dollars while a million dollars of production sat in the ground.— the operations manager, in our scenario
Why it stayed invisible
The weekend outage is the pattern. With no time written down for when each unit went down, when the vendor arrived and when it came back online, the down hours are a guess, and a guess is easy for a vendor to dispute.
- Outages logged from memory on Monday, not when they happened
- Response times nobody could prove
- A fleet average that hid the units that were down the most
- Units
- 40
- Monthly rental
- $4,700
- Runtime
- 92%
- Guarantee
- 98.6%
- BOE/d per unit
- 175
- Price
- $75/BOE
- Days in the month
- 31 days
What Mesquite Draw changed
They started logging every callout from the truck, with three times on each one: down, vendor on site, back online. At these numbers one unit down overnight costs about $6,638, and the next month's vendor meeting ran on documented hours instead of estimates.