Buying an Oil Well Workover Rig
Buying an oil well workover rig is a major investment — a new medium-sized rig can cost $500,000 to $1 million or more. But if you're an oil producer who does a lot of workover, or a workover service company, it's a necessary investment. Here's what you need to know to get the right rig for your operation.
New vs. Used: Which Is Better?
Buy New If: You're starting a workover company, you don't have a mechanic on staff, you need a warranty, or you want the latest technology. New rigs come with factory support, and you know exactly what you're getting. But they're expensive, and you lose a lot of money the second you take delivery.
Buy Used If: You have experience with workover rigs, you have a good mechanic, you're on a tight budget, or you're just starting out and want to minimize your risk. Used rigs can be 40-60% cheaper than new. But you have to do your homework. Bring an experienced driller or a workover consultant with you to inspect any used rig before you buy.
What to Check on a Used Rig
When you're looking at a used workover rig, check these things:
- Engine hours: How many hours on the main engine? Engines are expensive to overhaul.
- Drawworks condition: Is it worn? Are the brakes in good shape?
- Mast condition: Are there cracks, especially at the welds?
- Hydraulic system: Any leaks? Do all the functions work properly?
- Truck chassis: How many miles? Is it rusty? Does it start easily?
FAQ
Q: How much money can you make with a workover rig?
A: A medium workover rig rents for $15,000 to $30,000 per day. If you can keep the rig working 20-25 days a month, that's $300,000 to $750,000 a month in revenue. Subtract operating costs (crew, fuel, maintenance), and you're looking at a good profit margin. It's a good business if you can keep the rig busy.