Oil

Tuesday, Apr 10 2012 10:00 PM

Oil service company reaches into Bakersfield

BY JOHN COX Californian staff writer jcox@bakersfield.com

A large national company active in North Dakota's booming petroleum industry has stepped into Kern County's crowded oil services business with the purchase of a family-run operation with offices in Bakersfield and Colorado.

The Phoenix-based buyer, privately held Frontier Energy Group LLC, provides a variety of oil field services from 16 locations in North Dakota, Colorado, Wyoming, Nebraska, Montana and Utah. Its purchase of Spicer Wireline Service Inc. gives Frontier a toehold in California.

Terms of the deal were not disclosed. Neither company could be reached for comment Tuesday.

Frontier said in a news release Tuesday that it plans to hire additional employees in Kern County and expand its menu of services and its geographical reach within a year. It noted that Spicer's South Union Avenue headquarters "will be Frontier's first location in the San Joaquin Valley."

The transaction is noteworthy not because a national company is buying a locally based oil field services business; the entire industry has consolidated in recent years, and several independently owned Bakersfield companies have been acquired as discoveries of petroleum reservoirs here have raised Kern's energy profile.

As Frontier's news release suggests, the purchase is significant largely because the company has experience in the Bakken formation, a shale oil area that has put North Dakota at the heart of a domestic oil boom.

Representatives of local oil field service companies theorized that Frontier may be trying to parlay its technical experience in North Dakota to garner new business in California's largely untapped shale formations, which are similar in some ways to the Bakken.

"It might be just the thought of trying to get in front of the line," said Steve Layton, president of Bakersfield-based oil producer E&B Natural Resources Management Corp.

Frontier's entry to the local market could help ease the waiting list for getting a well rig out onto oil fields.

"There seems to be more demand for services than supply right now," he said.

But Frontier's local competitors noted that addressing the backlog presents its own challenge: finding experienced oil workers.

"They're going to have a difficult time" finding qualified employees, said Jay Mercer, human resources and health, safety and environment coordinator in Bakersfield for Kenai Drilling. He added that Kenai chose to reduce its growth amid the recent increase in local oil activity in order to keep its safety record strong.

Spicer specializes in what are known as wireline services, such as tests that tell oil producers how far down fluids can be found in a well, as well as underground detonations required as part of well abandonment jobs. The company works with small, independent producers as well as some large oil companies.

Gordon Isbell, vice president of Bakersfield's Excalibur Well Services, said the acquisition will mean greater competition, which has the potential to drive down oil field prices locally.

He added that Spicer's owners probably made a good decision to sell now while the industry's fortunes are strong.

"I think it's obviously a great time to sell, if you're going to sell your product line," he said.

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