Richard A. Murphy is the Chairman and CEO of Enservco Corporation and was appointed as an independent director to Enservco Corporation’s board of directors on January 20, 2016. He is managing member of Cross River Capital Management, LLC, the general partner of Cross River Partners, L.P. Cross River Partners, L.P., is an institutional investor in micro-cap and small-cap companies with market capitalizations up to $1.5 billion.
Mr. Murphy is responsible for investment research and analysis and for coordinating final investment decisions.
Prior to joining Cross River, Mr. Murphy was an analyst and assistant portfolio manager with SunAmerica Asset Management, LLC; an associate investment banker in the food and agriculture division at ING Barings; and a second vice president at Chase Manhattan Bank.
He is a former member of the Advisory Board of CMS Bancorp, Inc., and currently sits on the Applied Investment Management Board for the University of Notre Dame. In addition, he is on the board of MRI Holdings, a non-reporting restaurant company.
Mr. Murphy received his MBA from the University of Notre Dame-Mendoza College of Business in 1998 and his bachelor’s degree in political science from Gettysburg College in 1992.
In this 2,821 word interview, exclusively in the Wall Street Transcript, the Enservco CEO and director details his oil and gas drilling services business.
“Today Enservco provides three basic services: frac water heating, hot oiling, and acidizing.
Since 2004, we’ve grown from about 15 to 20 trucks, to today we have 62 hot oilers, 82 heaters and six acidizers.We are one of if not the largest player in the heating business. We have a national footprint.
We’re in five yards. Our headquarters is in the DJ Basin in Colorado. We have a pop-up yard in Wyoming. We’re in North Dakota, in Tioga. We’re in Texas, in both Carrizo Springs and southern Texas — in the Eagle Ford, not the Permian, which is much more competitive pricing.
And we’re in Pennsylvania. Pennsylvania has much more natural gas to it, so does the eastern half of Wyoming. We have a mix of both oil and gas.
Certain basins are more active than others. We’re able to move to those basins, unlike many of our competitors.
Particularly in the heating space, many of our competitors are mom and pops with two to three trucks — so we have a bit of a competitive advantage from that standpoint.”
The Enservco CEO discusses last year’s brutal economics for his sector:
“2020 was a tough year with the number of bankruptcies in the energy space.
I was talking to a friend who’s been in the oil patch since the 1980s — he’s a CEO of a major oilfield services company — and he says it’s the worst since the ’80s.
Obviously, there’s going to be a swing back a little bit. Drilling went from high 900s to 1,000 fracturers out there, down to as many as 200 at the bottom in the fourth quarter.
We’re definitely seeing the snap back in terms of demand from our clients. We have a lot of MSAs — Master Service Agreements — with all the big players, probably close to 100 MSAs, so we do touch all the big E&P companies.
And I would describe it as, we’re in Phase I. There’s definitely a cautious approach to getting out there and drilling, but we’re seeing a lot of workover rig activity, meaning if you have DUCs — drilled but uncompleted wells — you’re seeing those being opened up. That’s the low-hanging fruit, if you will.
There’s a lot of discussion about capex budgets in the second, third and fourth quarter being increased if this oil price stays where it is.
That being said, we were on pace to do 13 million barrels a day oil in the United States two years ago — everyone’s talking about going north of that, and I just recently read that we’re on pace now to do about 7.5 million barrels a day.
You just can’t flip the switch that quick; that supply coming out of the market is going to have a price impact worldwide. Hopefully the industry remains cautious and we get to that 800, 900 activity type level, which would be great for our business.”
Hot Oilers are the key to success for Enservco:
“I am trying to transform this company from a heating-first company to a hot oiling-first company, because of this aspect: Hot oiling occurs throughout the year, it’s not seasonal and it’s not based on weather.
There is some slight seasonal uptick, but not a lot.
We just did an offering that closed this morning. It really positions our company; it gives us a lot of strength on our balance sheet, which we haven’t had in the last couple years. That’ll give us an opportunity to really get into this hot oiling space and maybe try to become one of the biggest players in that space.
The margins in the business are terrific. It’s hard to get a hot oiler right now; the demand for that has ticked up quite a bit because of what I described earlier. So I’m really excited about that business. I think it has legs for quite a few years.
One of the biggest barriers to entry to that business is people. It’s hard to find a good hot oiler. What we can bring to the table is, if you can give them good equipment and consistent work, you can get the hot oilers.
Like I said, these mom and pops that — if you can only get 20 hours one week or 40 hours the next, they’re going to have a hard time getting and retaining quality people. The hot oilers come with a book of business.
It’s almost like Wall Street brokers. If you get one, he can bring a team over, and they have good contacts. We’ve experienced that firsthand recently.
I think it’s a great business if we could be a big player in it. And then I want the heating business to be that cherry on top of the ice cream, where if we get a cold winter like we’re having this year, we can generate a tremendous amount of revenue.
Margins are great, and that’ll be a real bonus for our company.”
Get the full detail on Enservco and its future growth by reading the entire 2,821 word interview with the CEO and Chairman, exclusively in the Wall Street Transcript.