Gulf Coast Compression

          OUR COMPANY, Gulf Coast Compression has been in business for over 9 years. I've been in the gas compression industry since 1989. We have three mechanics employed with the company and I am one of them. We average about $30,000 gross monthly. We carry about $60,000 "On the Books". In the last nine years we have had defaults totaling $400,000.  Never tried anything other than face to face visits to try and get my money back. Didn't trust that I had the signed agreements in place beforehand with these customers to make my case or knew they just didn't have the money. I know its an area I can use help on in the future. From 2011 to 2015 I had 14 employees but had to downsize when business fell due to oil prices. Our customers are about 50% oil and gas companies and 50% other service companies that service oil and gas companies. For the last six months I have been getting calls to supply gas compressors on a lease to own basis with separate maintenance contracts on that equipment. I've leased out an $80,000 gas compressor and two generators for $64,000. Yesterday I was awarded a gas compressor lease for $212,800 total. But I need $80,000 to do the project.
      MY OPPORTUNITY    I submitted a bid to a customer that I will lease the oil company a gas compressor for $40,000 down payment and  24 monthly payments of  $7,200 per month. I'm being told I have the job and the contract will be signed on October 1st along with wiring the $40,000 down payment. The gas compressor will cost me $75,000 and will have to be reconditioned at a cost of $45,000. So I need $80,000 fast to be paid back over 24 months when I get the $7,200 per month. I also will have a maintenance contract in place for $3,000 a month to maintain that equipment. These maintenance contracts are something we do all the time. I'm willing to pay a high interest rate of 30% for this loan. My house is paid for and is valued at $450,000. I'm willing to put my house as collateral. 
  WHY NOT GO TO BANK In May of this year my credit score was 740 rated "GOOD" but after I paid off my three credit cards the banks that the cards were for dropped the credit limit and since my available credit went down so did my credit score. I'm not sure why they dropped my available limits because I was never late. I've been paying the bills later and later each month since the slow down in May of this year. Up until this month, I've avoided getting any "1 in 30's" on my record. Business sales are back up to normal but it takes time for the profits to roll back around. Then last month I had college tuition,  two monthly Apartment payments, school money for my youngest son and I couldn't pay GM and got a "1 in 30". This dropped my credit score 64 points. So at a 603 rating, my bank won't talk to me.  Before 2015 I could call my banker and tell him to put $100,000 in my business checking account and it would be done that day without even going in and begging. Since then my bank of 40 years was taken over by the government and then sold to Hancock Whitney Bank.
     The second reason I will have a hard time at the bank is they will want my tax returns. I haven' files 2018,  nor 2019  income tax returns. During the last two years I had a customer that owned seven companies each worth a few million dollars. All seven companies were big customers of ours. They were all Oilfield service companies. Together they defaulted on $140,000.  In 2018 and 2019 I didn't have money to keep my lights on let alone paying income taxes which wouldn't have been much and I know I will have to file these returns soon but I was thrown back so much due to this. I waited too long before asking the bank for money to operate in the black so when I did ask for a loan, even with my house, it was denied. I still have $10,000 small loan from a finance company I'm still paying on from those days. I can show anyone the deposits into my business checking account for the last three years to prove we take in about $300,000 to $400,000 annually.  Over the last twelve months I've paid the last house note $3,000, paid my last Mercedes note of $2,001, paid my business loan last installment of $4,000 a month equaling $9,000 less monthly note now than before.
THE REWARDS  Before interest on the loan needed to finance the purchase and recondition of the gas compressor, there is a 40% gross profit on this deal. My company also secures another $3,000 per month maintenance contract with a 50% profit for many more years. This same customer will need another gas compressor the same size in six months time.  I have other customers asking me to replace their rental gas compressor with a gas compressor lease and maintenance agreement. They're just a hand full of companies that rent gas compressors because you need the millions of dollars in inventory to be in that business.  But I've found a way to use their inventory as our inventory and since we are so small of a company we can be flexible on everything and that's what gets playing on the same field as the national companies. These oil companies are paying monthly rent invoices anyways. 

Because I've been in this industry for 31 years, I know how to supply a reconditioned gas compressor for a "lease sale"and add the cost of a maintenance agreement for a cheaper monthly price than the National compressor companies can rent their gas compressors for.  Not many oil and gas companies don't want to save money. Their reward is after the lease is paid, the equipment is owned by them and their monthly cost is reduced again by up to 65%.  All they pay at that point is our monthly Maintenance Contract fees.  
 
Many gas compressors are installed on inland and offshore platforms costing from a quarter million to five million to install. In the past dealing with all four national gas compressor rental companies I and many other of their customers have offered to buy the gas compressor rather than pay to remove it and send it back to the gas compressor company. When all four gas compressor companies get that request their answer is the price is the same price it will cost for them to replace it. And the oil and gas company has to continue to pay rent until the new package is built. These national compressor companies have such concrete ways of doing business that owning the gas compressor is what so many small oil and gas companies want. If I had the money,, I could put out gas compressors one after the other for years to come.  In fact, I will be purchasing the gas compressor for this project from a national gas compressor company that was one of four companies that proposed a rental compressor to my customer on this project.   

If someone wants to make money, jump in an industry that all sales are sewn up by just a few companies, that have the prices set up for good profits and your competition are all national companies set in their ways.