Connecting To Industry

This two-man Bakken business, Newkota Services & Rentals, represents the past, present and future of the energy services sector. The company's brief history shows what it takes to start from scratch and remain relevant during low oil.
By Luke Geiver | August 14, 2015

If the open-top tank designed by Jarod Seifert and Kent Kirkhammer to contain flowback fluid had failed in 2011, Seifert would have lost his truck and his house. Had the patented fluid diffuser on the unique tank performed poorly, there would be no Newkota Sales & Rental, a Minot-based energy services firm founded by Seifert and Kirkhammer in 2011 that has experienced every opportunity and challenge the Bakken has created for those in the service business. Despite oil price-induced activity slowdowns, Newkota has found a way to overcome the Bakken’s first major lull, and like many of its competitors, the team is already making real moves to grow in advance of the recovery. Though the Newkota blueprint written by Seifert and Kirkhammer may be tough to duplicate, the company has shown what it takes to profit at any per-barrel price.

The Time To Leave
Kirkhammer and Seifert, both Canadian-born former oilfield workers who entered the Bakken play at the beginning of the activity frenzy, were not always their own bosses. They worked separately in Northern Alberta and together at Pure Energy Services’ North Dakota operations. Pure Energy, a production and flowback company, was acquired by Minot-based FMC Technologies in 2012. Seifert remembers working on the first wells in North Dakota trying to find the appropriate flowback and production approach for clients such as Whiting Petroleum Corp., Hunt Oil LLC and EOG Resources. “We were trying to figure out how to flowback the Bakken wells and get the best amount of production and still maintain the integrity of the formation,” Seifert says.

Although Kirkhammer was working in Pure’s operations side and Seifert eventually moved into sales, the two shared the same desire to break out on their own. “We tried to figure out some solutions for upcoming issues in the field,” Seifert says. With the looming regulations against the use of open pits for flowback water, the duo had the problem they felt needed solving. In 2012, after months of discussion and debate, North Dakota implemented regulations that eliminated the possibility of using open reserve pits on well sites. The regulations necessitated the need of storage and handling equipment for the fluids produced during well flowback. Preceding the release of the rule, Kirkhammer and Seifert left Pure Energy to start Newkota.

The Bakken Startup
“We started out of a garage. We had no investors,” Kirkhammer says. The duo did, however, have the designs to an open top tank that included a diffuser. When flowback water comes out of the well before it can be put on production, the fluid pressure is high and the fluid contains sand, water and any chemicals used in the fracking process. The diffusers mounted on the top of the tank act as a filter to reduce the pressure and particles that enter the open tank. According to Seifert, the high pressure mixture can ruin the integrity of the tank and the diffusers can plug up.  A new tank in some cases, may only last a few months. The Newkota design reduces the velocity and don’t plug. The first Newkota diffusers used in the field circa 2011 are still in use today and have never washed out, he says.

With a unique design dreamt up from Seifert after years of flowback and production testing work in Wyoming, Canada and North Dakota, the duo needed a manufacturer to bring the Newkota tank to life. Through Seifert’s boyhood friend, Newkota had access to a Canadian manufacturer that could build the unique tanks. Newkota could also pay 90-days after receiving the tanks, a payback plan Seifert says was crucial in the early days.

After securing the capital needed to buy two tanks by leveraging their trucks, houses and family relationships, the two-man team met with their first exploration and production clients whom each had already known from previous dealings. “We went into the first meeting thinking we would have a request for two [tanks] and they wanted four,” Seifert says. Following the meeting, the team was excited but unsure how they would pay for more, Kirkhammer says. During the next meeting, their client put in an order for 20 tanks. “It took off from there,” Kirkhammer says. Investments from family and increased loan amounts helped the pair bring the tanks to the field.

In Newkota’s early days, the pair was working 14 to 20 hour days performing tank moves and setting up locations by day before performing accounting and safety certification work at night. “We were running lean and mean,” Seifert says with a laugh of disbelief. Today, the Newkota team looks much different. Both founders have relinquished their early do-it-all roles for office jobs geared towards strategy or sales. In 2014, a private investor acquired a portion of Newkota, bringing with it oilfield executive leadership that Kirkhammer says has helped to lead the company to growth, and through the current oilfield slowdown.

“It was scary relinquishing control,” Seifert says on the topic of hiring and growing the company from a team of two to twenty-plus.

The Modern Energy Service Firm
Five years after starting Newkota, the team has set an example for others on how to navigate the Bakken energy service business. Shortly after receiving positive feedback and the all-important revenue stream from its tank operations, the company began to offer other products or services that it felt weren’t readily available in the Bakken.

Steam units mounted on trailers or cube vans have been a major hit. In the winter, when pipes moving water or product from a tank to the well head freeze and downtime starts to accumulate, for example, Newkota will sit on a frack site with its steam units. On a given well site, downtime for a completion crew can cost roughly $10,000 per hour. In the event of a freeze-up, the company operating the stie will typically place an air heater on the section of frozen pipe and in 45 minutes, the heat will unthaw the pipe. With Newkota’s steam system—adapted from Canadian operations—the pipes can be unthawed in five to 10 minutes. An operator uses a steam wand attached by hose to the Newkota van or skid. The steam is pumped through the wand.

From wellhead ladders to special ramps that allow for increased traffic on a well site, Seifert and Kirkhammer say they’ve always tried to stay ahead of the need curve in the Bakken. “Getting companies that trust us and come to us as a problem solver,” Seifert says, “is a huge thing.”

Getting companies to understand that Newkota operates with integrity and makes the smallest thing a “big deal,” is even more important to the founders. As oil prices have dropped, so too has the company’s activity volumes in the Bakken. The team has even had to let a group of its workforce go until things ramp up again. To offset any jobs lost due to client pullbacks, the team is working to ensure the work it does will not require a revisit. And, they are providing transparency to all billing efforts to keep any client from questioning costs or becoming frustrated due to hidden charges.

According to Seifert, part of Newkota’s Bakken success is linked to its clients. “We are building partnerships. That is what they (operators) tell us. They say we are working together and that we aren’t working for them.” The other part of its ability to grow in good times or sustain in tough times is linked to its core team members, many of whom have been apart of the Newkota team from the early days.

Chris Williams, the North Dakota operations manager, came from Phoenix. Before taking over the company’s N.D., operations, he spent a lot of time in the field learning the equipment and approach Seifert and Kirkhammer wanted all team members to take. Kirkhammer believes that aside from quality products and services, the best salesman are the company’s employees. Newkota added several former coworkers to its team to aid in filling key positions.

Zeke Hanna, now assistant operations manager in the state, formerly worked with Seifert at Pure Energy. “When he found out I was starting my own company he called me and said, ‘I don’t care what I’m doing. I want to be on board.’”

Even James Rozell, the former boss of Seifert and Kirkhammer  and now the company’s sales manager based out of Denver, joined the team.

Despite the slowdown, neither Kirkhammer nor Seifert have any hint of worry. “I’m optimistic about this year,” Seifert says. “With the activity that is going on out there we just want to do it better than anyone else. That is our approach.”

The team has new projects and patent-pending equipment waiting to hit the market. Both founders follow the Bakken and the other plays they are operating in closely to look for trends and new regulations that will necessitate new products. Until the next round of growth occurs, there are no houses or trucks in danger.

“It is still exciting times in the Bakken,” Kirkhammer says. “It isn’t going anywhere. Companies have so much invested in this.”

Author: Luke Geiver
Editor, The Bakken magazine
701-738-4944
lgeiver@bbiinternational.com