Equipment Appraisal Blog | Understanding Machinery Appraisals

Uncertainty in the Oil & Gas Drilling Markets Affects Equipment Values

Posted by Equipment Appraisal Services on Mon, Jul 26, 2021 @ 08:00 AM

Machinery Equipment Appraisal Oil Gas Fracking

Look Far and Wide and be Patient Before you Liquidate your Machinery & Equipment

Given the sharp downturn in the oil and gas field production industry during the last couple of years, with energy companies dealing with low market prices and oversupply, it is difficult to imagine the market ever returning to the boom days it enjoyed in the past. With many drilling and service companies currently sitting on their equipment, waiting for some positive news, it may seem like there is no light at the end of the tunnel.

Hydraulic fracturing or "fracking" as it is commonly referred to, is a process of drilling and then injecting water, sand, and chemicals into the earth, where the rock, or shale, below is fractured and, as a result, releases oil and gas. This industry has been heavily regulated, and, although it produces natural gas which is considered "cleaner" than coal, it has been harshly criticized for various health and safety reasons, among others.

The early results of fracking led to an oversupply of energy sources in the US, Canada, and various overseas countries, however, the resulting issues included a sharp drop in oil prices along with many energy services companies taking huge losses given all the costs and penalties of doing business.

If you own or work for a company that services the oil and gas fields where fracking was commonplace in the past but has since dried up, it may be time to complete an updated equipment appraisal on your equipment and begin to look outside your local resale markets to potentially sell some of your excess inventory of assets. There are still pockets in North America as well as overseas where the oil and gas markets remain active, and you may be able to find an opportunity to receive a fair price for your equipment.

As an alternative to liquidating through an auction service or sitting idly by while the uncertainty grows in this industry, you may want to consider engaging in a longer-term hybrid plan of selling what you can at fair prices and paring down your business to a more reasonable level, in anticipation of some kind of upward market turn in the months to come.

These market fluctuations can be severe in the oil and gas industry, and maybe no more so than it is experiencing at present, however, historically, there have always been changing economic developments over the years which turn things around when you least expect it.

Along the way, consider obtaining an updated equipment valuation from an independent accredited machinery & equipment appraiser who can provide realistic values on your assets without the additional agenda of trying to assist in your resale effort.

Tags: machinery & equipment appraisal, accredited appraisers, Oil & Gas Industry Assets, oil and gas equipment