PESCO shows positive signs amid oil/gas slump

Despite an upswing in its traditional oil and gas equipment supply business, PESCO has been exploring even more diversification options. Supplying brewery and distilling equipment is one possibility.

Leigh Black Irvin
Process Equipment & Service Co. President Kyle Rhodes talks about the company's operations on Jan. 6 at the PESCO facility in Farmington.

FARMINGTON — Local operators in the extractive industries are eagerly waiting for signs of a recovery from the slump that has paralyzed many businesses here for nearly a decade.

A local company — possibly offering a glimmer of hope for others — is hiring, a move one expert attributes to a Saudi Arabian agreement to slow production. Those production cuts are expected to push the price for a barrel of oil higher making it profitable for businesses to operate in the San Juan Basin again.

Process Equipment and Service Company, or PESCO, has recently hired 40 new employees on the heels of a significant uptake in business they’ve experienced within the last few months.

“There’s a lot of new activity in the San Juan Basin, D-J Basin, Bakken Shale, and in the Eagle Ford Shale” said Kyle Rhodes, president and CEO of PESCO. “We’ve recently been selling into those areas.”

Rhodes said PESCO is the largest supplier of well-site equipment to oil and gas development companies within the Rocky Mountain Region.

In its 100,000 square foot facility located on Highway 64, PESCO designs and manufactures equipment that includes separators, which are used to separate the product coming out of the wellhead into different components, such as gas, oil and water, so it can either be stored or transported for further processing.

Orlando Begaye, an assistant welder with Process Equipment & Service Co., or PESCO, works on a unit Jan. 6  in Farmington..

Other well-site equipment manufactured by the company includes dehydrators, filters, treaters and combustors, said Rhodes.

PESCO was founded in 1970 by Rhodes’ parents Ed and Mary Lou Rhodes, he explained. In 1973, the company began designing and manufacturing equipment primarily for industries operating in the San Juan Basin. In the 1990’s, Rhodes said, PESCO also started supplying equipment to natural gas industry operations located in Wyoming.

After his father passed away in 2000, Rhodes and his brother, Jim Rhodes, took over operation of the company.

PESCO survived the natural gas bust, Rhodes said, by manufacturing and supplying equipment for operations not only in states such as Louisiana, Texas, Montana and West Virginia, but also by expanding to countries such as Australia, Canada, Poland and even China.

And, the company began to get involved in supplying equipment for oil operations.

A welder works in the Process Equipment & Service Co., or PESCO, fabrication facility on Jan. 6  in Farmington.

“Most companies were natural gas or oil, but not many were both. This allowed us to expand our client base,” said Rhodes, adding that the company is currently pursuing projects in Mexico.

At its busiest several years ago, Rhodes said, PESCO had 310 employees, but dropped to 180 following the gas bust. The company’s recent hiring of 40 new employees has allowed PESCO to build its ranks back up to 227 employees, and Rhodes anticipates even more hires. Despite the downturn, PESCO earned more than $60 million in revenue during fiscal year 2015.

Another niche that PESCO has carved out, said Rhodes, is what he calls a “plug and play” or modular expertise they’ve built into their equipment.

“We can build a modular unit, set it up on-site and it’s ready to go,” he said. “They (the industries) really haven’t seen that before – usually the company has had to build everything on site.”

With 35 employees in their service department, PESCO is also able to travel to service their – as well as other manufacturer’s – equipment.

Keith Tucker manages PESCO’s sales group and fleet. Tucker said PESCO’s unique custom-made manufacturing methods ensure their customers, which include BP, ConocoPhillips, Encana, and Noble, keep coming back.

Designer Martinez Yazzie works on a drafting project on Jan. 6 at Process Equipment & Service Co., known as PESCO, in Farmington.

“People line up at the door to work here, but it’s the same with customers – they’re lined up at the door, too,” said Tucker.

John Byrom, formerly of DJ Simmons, joined the PESCO team last year, and serves as the company’s business development manager. Byrom also serves on the Four Corners Economic Development Board, a group made up of local civic and industry officials that seeks to encourage diversification of the local economy.

“I think it’s interesting that we’re a local company, but are so well-known regionally,” he said. “This is exactly the kind of economic base and industry engine that we need here. It’s also a bright light that we’re hiring.”

Byrom credits much of the recent upswing in business to last November’s OPEC agreement to cut oil production.

“It really started turning around this summer, when the pricing started to rebound,” he said. “Once we got out of $30 per barrel of oil, that’s when people started pulling out their rigs.”

Byrom said that despite the upswing, the company has been exploring even more diversification options and new markets related to the type of equipment they manufacture.

Jose Lopez, a leadman with Process Equipment & Service Co., known as PESCO, works on a piece of equipment at the company's fabrication facility on Jan. 6  in Farmington.

“One area we’ve heard about is the possibility of manufacturing equipment for brewing and water distilling purposes,” he said.

Tucker agrees this might be one of the diversification options PESCO looks to in the future.

“Micro-brews keep popping up, and brewing equipment such as vats could be manufactured here,” he said.

The most important contributor to PESCO’s success, said Rhodes, is the positive work environment he and other company leaders have tried to foster among the workers.

“This company’s not just about revenues and profits,” he said. “We’re a Christian-owned and operated company, and one of my personal goals is to prove to industry that you can be wildly successful being Christian-oriented.”

Rather than “pushing” Christian views on employees, Rhodes said company leaders model values like integrity, mutual respect and trust, as well as a commitment to excellence.

“We want to have an organization that people love to work for,” he said. “The core of any organization is the people, and how successful they become in the organization.”

Looking to the future, Rhodes said he is, for obvious reasons, happy about the recent upturn in business, but said he remains cautious about increased production adding to a glut in the market that would depress prices for the product.

“What we’re concerned about is what will happen when prices rise and a lot of oil starts being produced,” he said. “That could cause prices to drop again. That’s why we want to plan to not be as dependent on oil and gas. It’s a core part of our business, but we want to find a balance. But we’re excited — the only thing that can hold us back is a bust in oil prices.”

Leigh Black Irvin is the business editor for The Daily Times. She can be reached at 505-564-4621.

From left, Process Equipment & Service Co. President Kyle Rhodes, Sales and Fleet Manager Keith Tucker, and Business Development Manager John Byrom talk about the company's operations on Jan. 6 at the PESCO facility in Farmington.