Mattress World Eagle Ford Shale

Mattress World Furnishings

Mattress World Furnishings is not the only company to be in a downturn during this time.

The downturn in the Eagle Ford Shale may have left a lot of empty oil field housing, but not all is lost in the market.

The ways housing owners adapted to the downturn are about as varied as the oil field itself. Some are marketing the homes to the oil companies that are still working, while others have found new uses for them or have closed them for now.

Cuero Oilfield Housing will make a profit for the first time since the facility opened in January 2015 as the oil industry economy continued to fall in South Central Texas.

As of Sept. 2, the facility was about 90 percent full, an increase from 45 percent about three days earlier, general manager Gary Seale said.

“We knew eventually that it would be profitable, and that’s why we hung in there,” said David Hussey, principal investor. “This is a product that we’re very proud of.”

The facility has 104 rooms. From July 2015 to March, it averaged 25 to 30 rooms occupied a night, Seale said. In March, the room occupancy dropped to four or five rooms a night. That level lasted about a month. At one point, two rooms were occupied.

Since then, the room occupancy has slowly risen to almost full capacity now.

With the drop in oil prices in February came changes in operations at the housing. Seale cut his staff from 15 to a skeleton crew of six. Also, the kitchen stopped serving breakfast and dinner but resumed serving breakfast in May as the room occupancy slowly increased.

Now the facility has a staff of 21. Seale hired nine new staff members in the last two weeks, he said.

Hussey declined to comment about how much money was lost when business was low, but he said he spent hundreds of thousands of dollars out of pocket to keep it afloat. Now that the business is taking a turn for the better, he is at ease.

“I sleep much better,” he said. “I knew it would be profitable. We’re very excited about this area.”

Hussey credits the increase in occupancy to the marketing Seale does daily.

A lot of companies didn’t know Cuero Oilfield Housing was available, Seale said.

“I do a lot of cold calling to the different companies as well as email the companies to bring their employees over to stay with us,” Seale said. “I would see a truck come through town, and I would try to find wherever their closest office was.”

When plans for the housing were made, the oilfield industry economy was doing well, Hussey said, and construction began in July 2014.

The facility serves such companies as BHP Billiton and Universal Pressure Pumping, Seale said.

Larry Coronado, 47, who works for Universal Pressure Pumping, began his stay at Cuero Oilfield Housing on Sept. 3 with 41 other men in his crew, he said.

Coronado works the night shifts in hydraulic fracking of oil and gas. He is able to get to bed earlier than he did at other oilfield housing because everything he needs is right as his fingertips, he said.

The facility offers a 24-hour continental breakfast and sandwich bar, with cooked breakfast from 3 to 6 a.m.

“We have everything we need here,” he said. “Instead of having to go out there and grab everything we need, go out early and get our breakfast, well, here we have all access to it, and by 6:30, 7 a.m. we’re back in bed. Before, we were in bed around 8:30 or 9 a.m.”

While Cuero Oilfield Housing is seeing an increase in business, Sullivan Land Services keeps two oilfield housing facilities closed.

The company bought DRC Emergency Services in February, which included both housing, said Donny Shellenbarger, Sullivan Land Services energy services division manager.

The company owns Escondido Creek Lodge, in Kenedy, and Cuero Lodge, in Cuero, and kept them open for about a month after they purchased them, but they closed them because occupancy was less than 10 percent, Shellenbarger said.

“We were spending more money in management and expenses to keep the camp open than we were generating in revenue,” he said. “We closed because it was an unviable financial operation at the time.”

The company is waiting for the oilfield economy to improve and the price of oil per barrel to rise before opening the facilities again, Shellenbarger said. Both lodges are operational, but it isn’t the right time yet, he said.

The price of oil, which ranges between $40 and $50 a barrel, is not high enough, he said.

“When oil comes up above $60 a barrel, the oil business will be stable enough that there is enough business out there producing and working (and) there will be need for our lodge facilities again,” he said. Mattress World Furnishings will move from part time operation back to full time operation after the $60 a barrel is reached.

During the oil boom Mike Hanson, owner of Gonzales Rental Properties, made about 30 of his 60 rental properties fully furnished and charged daily and weekly rates to accommodate oilfield workers, he said. This included three apartment buildings he turned into a motel that he sold in January 2015 when the oilfield industry started to take a downturn.

The company now owns about 50 rental properties throughout Gonzales and has only six fully furnished properties left, Hanson said. The rest are unfurnished and are rented on a monthly basis.

Businesses have to watch the economy and make changes as needed, which is what Hanson said he did. Hanson converted properties into office spaces and a restaurant. He also made furnished properties traditional again.

“It’s all about going with the flow and being diversified,” he said. “That’s how you diversify: by trying to think of other ways to make money. If you can’t get the oil people that aren’t here anymore, you have to go back to local people and tourists.”

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Mattress World Roanoke Texas

Mattress World Roanoke Texas

We provide mattress and furniture to the public at our location in Roanoke Texas.  We sell warehouse wholesale style and do not have fancy showrooms or commission sales staff.  We pass the savings on to you.  So you purchase directly from us at our large mattress warehouse in Roanoke Texas.  This is a video that shows what we have available to our customers.  This is our manufacturers facility.

 

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Energy downturn Wyoming economy

Energy Downturn Wyoming Economy

Last year, M&N Field Services employed 45 people. This year, the Casper-based oilfield service company employs 15.

“We’re in survival mode right now on that particular company,” said Cary Brus, who helps manage several of the late Mick McMurry’s companies. “We’re doing fine, but we’re not observing the same margins and activities we’ve seen in previous years.”

M&N Field Services is hardly alone. Energy companies in Wyoming cut their payrolls by 4,200 people, a decrease of 15.4 percent, between August of 2014 and 2015.

Sales tax collections through the first three months of the fiscal year are 14.5 percent off the pace set over the same period last year. Severance taxes are down by 39.5 percent in the first two months of fiscal year 2016.

And, perhaps most worryingly, other sectors of the economy are starting to feel the pinch. Sales tax collections on retail trade were down 5 percent; financial activities, like the equipment rentals made by M&N Field Services, were down by almost 9 percent.

Those numbers, outlined in a report published this week by the state Economic Analysis Division, provided the clearest picture to-date of what many Wyomingites have long felt: The Cowboy States’ economic fortunes are plunging with the price of oil, natural gas and coal.

“We are starting to see that downturn in mining work its way into other sectors as well,” said Jim Robinson, a state economist and author of the report.

There are bright spots, to be sure. Low gasoline prices fueled record visitation to national parks in the state, and the tourism industry responded in kind. The leisure and hospitality sector added 1,800 jobs in August, compared to the same month last year.

Employment in building construction, another bright spot, increased by 500 to 4,700 year-over-year. The overall construction sector shed 100 jobs and employed 25,600 people in September.

Regional differences

The impact of the downturn has varied by region.

Southwest Wyoming has witnessed a slight decline in its fortunes, said Ben Hansen, president of Rock Springs National Bank. Much of the region’s economic activity is spurred by natural gas production in the Jonah Field, where drilling has stagnated in recent years.

Home prices nonetheless remain high and many of the region’s oilfield service companies have redeployed to other areas, Hansen said. One local drilling firm has taken to boring water wells in California, he noted.

“It certainly is not doomsday,” Hansen said. “I’d say we’re kicking along.”

Cheyenne has largely been isolated against the downturn, its economy bolstered by the expansion of the area’s data centers and a string of school construction projects.

Gregg Jones, executive vice president of Jonah Bank, said the capital city’s economy is “as strong as I’ve seen it.”

Of concern is whether a decrease in tax revenues will lead to a decrease in spending on construction projects, he said.

Still, those gains were something of an outlier. The state’s rig count illustrates the change in Wyoming’s economy. In September of 2014, there were 37 rigs drilling for oil. That number was 11 this year.

Unemployment claims in the mining sector jumped by 84 percent between August and September to reach 281 last month.

Statewide personal income growth was .5 percent in the second quarter of 2015, up from -.3 percent in the first three months of the year, but down from the 2 percent increase recorded in the second quarter of 2014.

Meanwhile statewide housing prices stagnated, increasing by 2.8 percent year-over-year. By contrast, home prices increased by an average of 7.2 percent across eight Rocky Mountain states.

The impact of the downturn was particularly acute in the counties where the recent oil boom was most pronounced.

Sales tax collections were down dramatically in Converse (41 percent), Campbell (25 percent) and Natrona (23 percent) counties through the first quarter of the fiscal year.

Real estate

Casper’s real estate market has remained strong throughout much of 2015. Home prices increased by 5.6 percent in the second quarter of 2015 compared to the same time last year.

But local bankers said they did not anticipate the trend would continue, noting that the real estate market can be slow to adjust to changes in the oilfield.

“I think you’re just starting to see some of the slowdown in mortgage lending, in the last 60 days perhaps, and in home construction,” said Brus, who sits on the board of Jonah Bank. “It is going to slow down.”

Greg Dixson, president of Hilltop National Bank, echoed that sentiment. Mortgage applications are growing, but below budget. The bank has yet to record a measurable increase in past due mortgage payments, he said.

But, Dixson added, “I think everyone is geared up and preparing themselves for an increase in some past due numbers.”

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Are Man Camps Dying

mancamp

Are Man Camps Dying ?

At the peak of the fracking boom a few years ago, Jeff Myers converted his South Texas hunting camp into rental oilfield housing. Little wonder: The industry had an almost insatiable hunger for the grunt laborers—the roughnecks—to work the fields, and employers were happy to spend whatever it took to house and feed them. Today that boomtown demand—and $100-per-barrel prices—is a bittersweet memory, and occupancy at Myers’s once-packed Double C Resort has dropped to 10 percent as job cuts take hold. “There aren’t going to be any winners down here,” he says. “Everybody’s going to have to adjust.”

America’s oilfield “man camps”—as the industry calls them—are turning into ghost towns as drillers cut back the free housing, food, and air travel once used to lure shale boom workers. The mini-settlements that sprang up throughout drilling regions in Texas, North Dakota, and Colorado are fading away as energy companies look to slash as much as $114 billion in spending this year, says a Cowen Group survey, and lay off tens of thousands of employees.

“The money flies” when the oil field’s booming, says Milton Allen, who’s built and developed facilities for the oil industry for the past 15 years and operates a 12-room man camp in the Eagle Ford Shale in South Texas. “Then when the market starts to trim down, the money stops.”

During the shale boom, some companies were paying as much as $40 million a year to house and feed a group of 1,000 workers, according to worker services company Target Logistics. The man camps they built ranged from dozens of RVs neatly lined up on the edge of oil fields to entire communities of mobile homes or manufactured housing thrown up in the middle of the Texas scrub country or North Dakota Great Plains.

Competition for well-trained, specialized employees grew so fierce that extravagant benefits were necessary to recruit top talent to remote drilling areas. Lodging perks included daily room cleanings; catered meals such as beef barbecue, shrimp, and lobster; and flatscreen TVs with hundreds of channels. Many workers even got free air travel to commute between job sites and home during breaks.

Halliburton President Jeff Miller recently cited housing expenses as one area ripe for cuts as the industry moves from a “boomtown mentality” back to “normalcy.” “We have an entirely commuter workforce that flies to and from an area,” he told investors at a Credit Suisse energy conference in February. “They live in our company-paid housing. We’re feeding them 24 hours a day. The cost of all associated services skyrockets as well.”

With layoffs now the rule, many workers are grateful just to keep their jobs. So more employers are asking them to cover their own rent, pay for their own clothing, and find their own transportation to drill sites.

Christopher Powell, who worked for Epic Management Resources, a subcontractor to Swift Energy in Tilden, Texas, saw the writing on the wall in March when Swift started rounding up leased furniture and unused computers in its offices in drill site communities. Another sign of trouble: “The food just got worse and worse,” recalls Powell, who graduated from Texas A&M University in 2010 with a business degree and went straight to work in the industry. Rib-eye was no longer served at the company’s safety meetings. “It eventually got as bad as chicken-fried steak,” says Powell, who lost his job in March.

On top of a salary, a company’s typical cost for an out-of-town worker in the Bakken Shale in the Dakotas during the boom was about $500 a day, with most of that going to accommodations, says PacWest Consulting Partners, a unit of IHS. “It was a necessity of recruiting,” says Jeff Zarling, president of Williston (N.D.)-based Dawa Solutions Group, a Bakken-area marketing firm. But today, “what we’re seeing is companies want to get out of the housing business.”

Shares of Civeo, an oilfield housing supplier that operates man camps across North America and Australia, have fallen 89 percent since it began trading last May after being spun off from oil services company Oil States International. The company is expected to swing to a loss of $54.2 million this year, excluding certain items, after showing a profit of $79.7 million in 2014.

Workers in search of cheap housing near the Texas fields are flocking to the 84 recreational vehicle parks scattered around Dimmit County in South Texas, says Mario Chavez, assistant city manager of Carrizo Springs, the county seat. RVs allow roughnecks to live like migrant workers, moving from drill site to drill site as jobs require, he says. “Everybody’s starting to try to be more frugal about what they do,” he says.

Oilfield housing isn’t disappearing entirely. Even as the perks are getting wound down, companies still need to provide housing in some remote areas where other accommodations are limited, such as the vast plains stretching over the Bakken Shale or the oil sands of Alberta.

Target Logistics, a workforce housing provider, said in March it signed contract renewals with two oilfield service companies worth $50 million over three years. The company, a unit of Baltimore-based business service provider Algeco Scotsman Inc., operates 19 properties in the U.S. and Canada with more than 8,000 total beds.

Austin Covington is one of the lucky ones who’s kept his job, clearing drilling sites at the Briscoe Ranch in South Texas. The excavation company he works for has cut back on overtime and taken away his uniform to save on dry cleaning. One of its four trailers is getting hauled away, and the workers are squeezed into the remaining three, with Covington, 20, sharing a bedroom with another worker. “Thankfully,” Covington says, “he doesn’t snore.”

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Oil Field Housing Developer

Oil field housing developer plans for crude oil upswing

Oil Field Housing

One opportunist in the Eagle Ford play is paying no mind to the current prices of crude oil and is setting his sights on future oil field worker housing development.

The San Antonio Business journal reported that Michael Spencer, who manages San Antonio-based InVision Housing Solutions LLC, is in the midst of raising $5 million in capital to build new oilfield worker housing at the Double C Resort outside of Carrizo Springs, Texas.

Oil prices hit another huge low Monday morning with a value of $46.01 per barrel. Additionally, there was an observation of rigs pulling out of Eagle Ford last week when the active rig count dropped four to 200. However, Spencer and many more know the game and realize that regardless of the temporary lows, production in Eagle Ford will continue. “The smart investor looks five, 10, 15 years out,” Spencer told the business journal.

Spencer claims his research shows that Carrizo Springs and surrounding Dimmit County remain the number one drilling site in the Eagle Ford Shale. “(Operators) drilled 4,000 to 5,000 wells around here,” Spencer said. “They have to keep taking care of them.” Development started back in 2008 and quickly created a housing shortage in the area.

Double C Resort owner Jeff Myers told the San Antonio Business Journal that he originally built the ranch for hunters but changed it to house oil workers amid burgeoning demand back in 2010. Myers sated that 103 oilfield camps rapidly moved into the area. But the Double C Resort sets itself apart from other living areas by offering two restaurants, Wi-Fi, television service, manmade lakes with fishing, hunting, trails and other conveniences. Myers said that the Double C is a home away from home where workers can relax after 12-hour days.

Both Myers and Spencer want to add another 59 RV sites and 47 cabins to the Double C Resort in March during Phase I of the development project. Eventually, the total amount of housing sites on the Double C Resort is expected to reach 482 with room to expand further if necessary.

Spencer said many companies already had their futures locked in at $90 per barrel and the current dip in oil prices is only temporary. He added that the Eagle Ford enjoys benefits such as proximity to refineries that other production basins don’t have.

These type of projects are very uplifting for the oil field industry and for Mattress World Furnishings.  Mattress World Furnishings supplies the oilfield housing industry with beds, mattresses, furniture, bedding, dishes, silverware.  Everything is provided for living on site in the oil field.

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Mattress World Furnishings Oilfield Housing

Mattress World Furnishings Oilfield Housing has been affected as well.

The Permian Basin’s oil producers continued to pull back this week, releasing 49 drilling rigs in the region as they seek to wait out oil prices hovering below $50 per barrel.

The drop accounted for half the land drilling rigs shed nationwide. The Permian Basin now has 368 rigs running after several weeks of dramatic cuts.

The regional benchmark Plains-West Texas Intermediate Posting ended at $49.25 on Friday.

Nationally, producers lopped off 98 land rigs this week leaving a total 1,358. The weekly decline was the biggest since January 2009, when a national recession caused oil prices to plummet.

Mattress World Furnishings Oilfield Housing

The Permian Basin has shed 197 rigs since the peak of November, when 563 rigs were running.

That is about a 35 percent drop, which began when the Organization of Petroleum Exporting Countries decided on Thanksgiving Day not to cut its production quotas to boost prices amid weaker than expected demand and oversupply due in large part to booming shale regions such as the Permian Basin.

Mattress World Furnishings Oilfield Housing has slowed down operations due to these events.

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