The Permian Basin stands as one of America’s most fiercely competitive markets for energy and service companies. Despite economic turbulence elsewhere, this unique region often plays by its own rules, presenting both significant opportunities and challenges. Larry Nielsen, Senior Vice President with the Real Estate Ranch, has spent over a decade in oil and gas, with the last five years focused specifically on industrial real estate in this dynamic region.
Understand the Landscape Before You Move
Most outsiders walk into the Permian Basin with their eyes half-closed. “Typically, when I get a customer that is from outside the region, they do not understand exactly what they’re getting into,” Larry says. He’s not exaggerating – hundreds of companies already slug it out in what he calls “one of the most competitive markets for E&P service companies.” What makes this place so different? For starters, it barely notices when the rest of the economy catches a cold. Larry saw it firsthand during the pandemic. “When the country was going through COVID, the Permian Basin was still active, was still thriving. Even though oil and gas prices went down tremendously, there were still companies positioning themselves during that time.”
That’s why local insight matters so much here. Larry puts it bluntly: “You have to understand the landscape and you have to understand the location. And if you’re from out of town, there can be some unrealistic expectations.” After 15 years in the region, he’s seen plenty of newcomers learn this lesson the hard way.
Leverage Strategic Relationships
The Permian Basin runs on relationships – period. “In this market, it’s really about who you know,” Larry says. His advice is straightforward: “I recommend that every service company coming into the market find a great salesperson initially. Someone who’s been in the market to understand, again, the landscape, but also the players in the market.” The math is simple. Too many companies offer identical services. Getting noticed means getting through the door first. “Without having somebody that can get you in the door of the companies that you want to work for, it is very, very difficult,” Larry explains.
But connections go beyond just finding customers. “It’s not only just getting into the door so that you can gain more revenue. It’s the little things,” he points out. “Who does my cleaning for my property? Who brings me trash roll-offs?” These details eat up time and money when you’re starting fresh. “Spending time trying to find the specific contacts that you need costs money,” Larry says. “Utilizing someone like myself that has those contacts saves you time and effort.”
Customize the Real Estate Strategy to the Business Model
Here’s where most companies get burned – paying too much for their real estate. “There are a lot of people that have unrealistic expectations when they come into the Permian Basin as far as price points, as far as availability of properties,” Larry says. When companies find a spot that looks right, they often jump too quickly. Larry sees it all the time. “You’d be surprised how many people, when they see a location that seems to fit their needs, will pay way more than they need to when executing their lease or purchasing the building.” As a tenant rep, he considers it his job to prevent these costly mistakes. “My job is to go out there and ensure that you are paying an actual market price and not an exuberant price.”
The consequences go beyond just overpaying. “I see too many companies coming in, signing leases that will not only inhibit their growth but also not allow them flexibility when they need it,” he warns. That’s why he insists on understanding a company’s real needs before they sign anything. It all comes down to three basics: “Understanding the landscape before you move. Leveraging strategic relationships. Customizing your business model based upon the true price per square foot in the market,” Larry summarizes. “These are the things that I can help bring value to your company when you’re entering into the Midland Market.”
For companies eyeing the Permian Basin, Larry’s message is clear – don’t go it alone. The market doesn’t forgive newcomer mistakes, but it does reward those who come prepared. Connect with Larry Nielsen on LinkedIn to tap into over 15 years of insider knowledge in the Permian Basin.
