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Moncla Plans Alaska Expansion
25-Jun-2013 / Upstream, The Oil & Gas International Magazine / Luke Johnson / View Article

Workover specialist Moncla Companies is looking to establish a permanent presence in Alaska after booking a multi-year agreement with Hilcorp Energy to operate a pair of rigs in the frigid frontier.

Hilcorp and Moncla announced a three-year agreement last week that would see the driller supply and staff a platform rig for jobs in Cook Inlet, Alaska. Moncla will also staff another rig currently under construction in Louisiana that Hilcorp will own.

The contract marks the first effort for the Lafayette, Louisiana-based driller in Alaska. Moncla typically contracts its barge and land rigs to customers in southern Louisiana and elsewhere on the Gulf Coast, and two years ago it drilled a well for US independent Gulfport Energy in Belize.

The latest agreement with Hilcorp will be Moncla’s first in the cold climes of Alaska, but chief executive Mike Moncla sees the US state as a hotbed of opportunity.

“Alaska is definitely a market we are looking to expand into,” Moncla told Upstream in an interview. “We’re looking at acquisitions in that area as we speak.”

He said the company is looking to buy more rigs in Alaska and possibly an entire yard, likely by the end of this year. The company also plans to open up a “big office” in the state.

Moncla had to retrofit Rig 301 to prepare for the Hilcorp job, and winterise it for the 50-person crew that would be operating it.

The company had never contracted a platform rig so Rig 301 had to be modified to fit the beams on Hilcorp’s unit in Cook Inlet, Moncla said.

Moncla also contracted CRG Boiler Systems in Odessa, Texas, to provide the rigs with steamers to help mitigate harsh temperatures for workers.

Moncla is a third-generation family-owned driller, at least in terms of its business model. It started as Pelican Well Services in the mid-1950s and turned into Moncla Well Services in the mid-1980s. By 2007, Moncla was the biggest privately held workover company in the US, having grown its rig fleet from one rig to 53, according to the current chief executive.

Moncla went up for sale in 2006, and land-rig giant Nabors made the eventual high bid. In the end, Moncla said he and his brothers walked away from the deal.

“At the final hour, we just couldn’t pull the trigger,” he said.

Moncla ended up selling its business to Key Energy Services for $145 million in 2007. In May 2010, however, the Moncla brothers approached Key to buy back the barge division of the business.

“We knew that they really weren’t that fond of the barge business, and the market had dropped significantly, so we felt like it was an opportunity to start over again and get back to the family business, which is what we loved doing,” Moncla said.

Moncla now owns eight barge rigs and nine land rigs and is seeing high demand for its workover services, especially from operators like Hilcorp and Gulfport, companies that are able to squeeze oil out of areas that larger companies have dismissed as uneconomic.

Mike Moncla does not expect the demand for workover rigs to end anytime soon.

“As long as oil stays in that $90 range, I just don’t see us slowing down,” he said, adding that the company’s barge business is busier than its land business.

In addition to the planned Alaska expansion, Moncla hopes to re-establish offices in Mississippi and Texas, which existed before the sale to Key. He also said the company is looking at opportunities in the Bakken play of North Dakota.

“We’re young and we’re aggressive and we’re hoping to build our business,” he said. “We love the workover business. It’s in our blood.”