If you've been in the Permian Basin long enough, you know the pattern. Prices run up, rigs get added, contracts flow freely, and companies expand. Then the cycle turns. Prices drop, operators cut spending, service companies scramble for work, and suddenly the invoices that were supposed to arrive in 30 days are now 120 days out — if they come at all.
The businesses that survive these downturns — and there have been several significant ones in the last two decades — share common traits. They don't freeze. They move quickly, get creative about their finances, and make hard decisions before they're forced to by their lenders or their vendors.
Here are the strategies we've seen work for Permian Basin oilfield companies in tough markets.
The Strategies That Actually Work
1. Get Aggressive on AR — Immediately
When the market turns, payment cycles extend across the board. Operators slow down payments to service companies. Service companies slow down payments to their vendors. It's a chain reaction. The businesses that survive are the ones that get to the front of the line. That means calling every past-due account the moment the invoice ages past 30 days — not 60, not 90. The longer you wait, the harder collection becomes, because your customers are making the same cash preservation decisions you are.
2. Renegotiate AP Before You Miss Payments
Call your key vendors and lenders before you miss a payment — not after. This is counterintuitive for many business owners, but creditors respond far better to proactive communication than to silence followed by a missed payment. A 90-day payment deferral that you negotiate in advance is infinitely better for your business relationships and your credit than a 90-day delinquency that happens by default.
3. Turn Idle Equipment into Cash
During a slowdown, idle equipment is one of your most underused assets. Rigs, trucks, trailers, and heavy machinery that aren't working are costing you in storage, maintenance, and insurance — while producing zero revenue. Liquidating equipment you don't need in the current environment frees up cash and reduces overhead. Even renting equipment to other operators during your slow periods can generate meaningful cash flow.
4. Restructure Your Debt Before the Bank Does It For You
When cash flow tightens, debt service becomes the biggest fixed cost in the business. If your current debt structure was built for the revenue levels of a hot market, it may not be serviceable in a downturn. Proactively working with lenders to restructure terms — lower payments, extended timelines, interest-only periods — can be the difference between staying open and closing. Lenders generally prefer restructuring to default, which gives you more leverage than you might think.
5. Do a Serious Operations Analysis
Downturns are brutal, but they force a discipline that boom times obscure. When revenue is down, every line on the P&L matters. This is the right moment to identify which clients are profitable and which you are effectively subsidizing, which operations are efficient and which are bleeding margin, and where your G&A expenses have crept up beyond what the business actually needs. The companies that use downturns to tighten operations often come out of the cycle more profitable than before it started.
"The Permian has been through multiple downturns. The companies that come out the other side are not necessarily the biggest ones — they're the ones that moved fastest when the market turned."
When to Bring in Outside Help
One of the most common mistakes oilfield business owners make during a downturn is trying to manage everything internally — to keep the crisis private, not let vendors or clients know there's a problem, and hope conditions improve before anything breaks.
The reality is that the oilfield is a small world. Your vendors already know the market is tough. Your bank already sees your cash flow statements. Bringing in outside expertise early — a consulting firm that specializes in financial restructuring, AR recovery, and debt workout — is not a sign of failure. It's the same decision that the operators and majors make when they hire financial advisors during tough cycles.
Outside advisors bring relationships, negotiating leverage, and objectivity that internal management often can't provide. They've done this before. They know what creditors will accept and what they won't, where you can save money quickly, and which problems are actually solvable.
The Bottom Line
Permian Basin businesses have survived every downturn this industry has thrown at them. The ones that survive aren't the ones that wait — they're the ones that make decisions quickly, get help when they need it, and use the difficult periods to build a leaner, more resilient company.
Built for the Oilfield. Ready for Tough Markets.
Lawson & Murphy works with Permian Basin and Texas oilfield companies to navigate financial challenges — from AR recovery to debt restructuring to operational consulting.
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