The aftermarket for oil service equipment remains strong as companies are forced to sell assets for money or are past solvency and forced to liquidate, said John Daniel and Agata Bielicki, analysts with Simmons & Co. International in a July 22 report.

Service company executives and analysts have said that while many willing sellers are available, few are willing to gorge on fleets of mothballed equipment with drilling at a standstill.

Auction houses are where the equipment has a chance to get back into the field. But Daniel said it pays to thoroughly examine equipment prior to purchase.

Recently, frack pumps have sold for as little as $25,000 per unit—far below a new unit’s $900,000 to $1 million price tag.

As with any auction, caveat emptor—let the buyer beware.

“This equipment is in terrible condition, often with broken and/or missing component parts,” he said, suggesting the pumps are likely to be stripped for parts.

“Frack tanks sell for less than $5,000 per tank but these are older, worn-out units whereas relatively new units have sold for closer to about $20,000 per tank or roughly 50% of replacement value.”

The same goes for well service rigs, drilling rigs and “all the other exciting oil-field iron.”

Daniel identified two primary auction companies that he tracks: Kruse Energy & Equipment Auctioneers and Ritchie Bros. (RBA).

Kruse, a subsidiary of IronPlanet, is based in the Permian Basin and is a more focused energy specialist, Daniel said. Kruse has conducted 25 auctions since the first quarter of 2014.

In May, service industry experts were already predicting that oilfield buyers would be in short supply.

Adam Peakes, managing director of investment banking, Tudor, Pickering, Holt & Co., said capital is too precious.

“No one is going out of their way at this point in the market to say this is my opportunity to aggressively roll up frack fleets,” he said.

So far that’s been true. But the auctions still attract bids.

Larry Mitchell, who handles sales in Texas for Kruse, said auctioned prices are down as much as 70% but generally fetch about 50% of what they did in 2013 and 2014.

“As with any equipment, damage condition and age” dictate the price, Mitchell told Hart Energy.

Kruse has sold more than 150 well service rigs in the past 12-15 months as well as 139 drilling rigs. The company has overseen the liquidations of Ringo Drilling, JW Drilling, Western Drilling and Oil Flats Energy.

Ringo Drilling, for instance, auctioned equipment in late September that generated $5.3 million in gross proceeds. In a bankruptcy filing, the company put the fair market value of its assets, including rigs, trucks and trailers, at $16.7 million.

In the auction, Ringo sold nine rig packages for $1.5 million out of a fleet of 12 rigs that had a book value of $14.2 million, bankruptcy filings show.

In addition, Kruse has auctioned unused back-in well service rigs for the U.S. Marshals office. Mitchell said he was told the equipment was formerly owned by a Mexican company that had shipped it to a port in Mexico.

When the trucking company was not paid for moving equipment over water it was seized under maritime law, he said.

Ritchie Bros., which bills itself the world's largest industrial auctioneer, has been active in oil equipment as well. The company is set to auction a number of Baker Hughes Inc. (BHI) assets in Fort Worth, Texas, on July 22, Daniel said.

“This is the third such auction as it did a similar sale of BHI assets in Houston in June and another auction this month in Midland,” he said.

The Ritchie website allows users to see all of the sales prices if the user completes a free registration. Recent Baker Hughes sales have included frack pumps, blenders, cementing equipment and coiled tubing units.

“Sales prices thus far have been weak as frack pumps, for instance, have sold in the $35,000-$45,000 range in many cases,” he said.

However, the equipment appears to be in bad shape in many cases with missing or broken component parts that will be costly to restore to working order.

In the July 22 auction, Daniel said roughly 30 frack units are for sale. In August, the auction house will also have a sale in Williston, N.D., and roughly 100 frack tanks which will be sold.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.