Rosser Newton

A master service agreement landed on a field superintendent's desk on a Friday afternoon, thirty one pages long, due back signed by Monday so a crew could start on schedule. He read the day rate on page two and initialed the rest the way most people sign an insurance renewal or a lease. Buried on page nineteen was the indemnity language, and it decided, long before anyone imagined a bad day, exactly who would pay for one. I am Rosser Newton, and in more than 35 years investing in oil, gas, and oilfield service companies I have read that same page nineteen more times than I can count, usually after something has already gone wrong rather than before. The price on page two gets negotiated hard. Two calls, sometimes three, over a day rate that might move five percent either way. The indemnity and insurance sections almost never get the same attention, and they are the sections that decide who actually bears the cost of a blowout, a fire, a serious injury, or a piece of equipment...

The yard walk I remember best was in West Texas in August, and it started at the wash bay and ended at a row of pumps that had not stopped running in months. The brass tags on two of them carried rebuild dates more than two years past due, and the yard manager said what yard managers always say, that they were running fine. I am Rosser Newton. I live in Dallas. More than 35 years of my working life have gone to privately held energy businesses, in banking, in investing, and in boardrooms. In all that time I have never once seen a line item called deferred maintenance in a monthly financial package, and I have watched it decide the fate of more than one company. Every deferral is a borrowing. When a rebuild gets pushed a quarter, the company has taken a loan from its own equipment, with principal equal to the work skipped and interest paid in rising failure risk and shortened useful life. No lender papers it, no covenant tests it, and no financial statement discloses it. Why deferre...