JMAC Resources – Taking the Risk and Giving Back

Growing up on a farm in the Columbian Basin Irrigation Project, Jon McCreary, owner of JMAC Resources, is no stranger to hard work and Midwestern values. “As a young man, I witnessed my father working extremely long hours on construction jobs during the day and doing farm work late in to most evenings. As an early teen, I spent my summer days driving tractor, stacking hay and changing siphon tubes. I enjoyed many afternoons of swimming in irrigation ditches and playing sports with the neighborhood kids, who lived within a couple of miles from my family’s farm. I grew up in a giving home where my parents befriended people that others avoided. They faithfully served their church, gave to those in need and gave their children opportunities they themselves never had,” states McCreary.

McCreary graduated from college in 1990 with degrees in finance and accounting and then began a career in corporate finance. His ability to simplify complex problems and steer the decision committees and boards of directors with sharp analysis and solid recommendations was quickly recognized and he advanced rapidly. Despite his early success; becoming the Chief Investment Officer of a large life insurance company and later, the Chief Financial Officer of a publicly traded commercial bank, his goal and ambition was to go back to his independent roots, exercise his entrepreneurial skills and to run his own company.

In 2007, McCreary heard about the start of the oil boom in North Dakota. After completing some due diligence, which included several conversations with industry regulators and Williston locals, he saw tremendous investment opportunities across all oilfield service businesses. He found that most of the existing company owners were in or approaching their retirement years and there were a number of small companies for sale. He decided to risk it all, selling everything he had and borrowing every penny he could, to purchase a small oilfield contracting company that had been around since the late 1970s. McCreary advised, “My liabilities were already more than my assets due to the nationwide real estate collapse, prior to ‘doubling down’ on the oil patch.” The year leading up to the purchase (2007) the company’s sales had already grown from under one million annually to $3.5 million, and then tripled in 2008 under his first year of ownership. Even though the company had been around for over thirty years, every facet of the company had to be changed to keep up with rapid growth. JMAC purchased tens of millions of dollars of equipment, took on significant debt and soon was unable to pay vendors on time due to slow paying customers causing a lack of working capital. Additional debt increased risks, but also offered additional rewards considering the potential the oil boom offered.

Due to the global financial collapse in 2009, North Dakota oil prices dropped to $30 a barrel. Many exploration companies lost their funding and laid down rigs everywhere. Thanks to a hard winter and strong customer relationships JMAC Resources struggled through the slowdown by plowing snow for their oilfield customers. Getting through that fall and winter meant draining his own 401K account to make payroll. Eventually the rigs came back and the worked flowed in leading to record revenue in 2010 and again in 2011. To date, JMAC and their affiliates have grown to over 200 employees and perform work for most of the exploration companies working within an eighty mile radius of their Williston shop.

Administration – In the beginning, the initial staff consisted of a receptionist and a bookkeeper who performed all of the accounting functions. Invoices were created manually on spreadsheets. This simple form of accounting didn’t allow JMAC to perform job costing; therefore, they undertook a major software update. They chose software designed for contractors five times their size, for its capabilities and potential to automate and integrate many manually performed functions. Now, JMAC has the ability to calculate the cost to operate each piece of equipment, each individual job and much more. Their accounting staff has grown to eleven extremely busy individuals, including three CPAs. In an effort to keep customers satisfied they provide customize invoices, alter invoice frequency and customize reports for customers.

Relationships – For JMAC and its subsidiaries, constant communication with their customers is of the utmost importance. McCreary states, “Our business is built around our relationship with our customers. When we fail in this area, it hurts our reputation and it is difficult to recover and rebuild; therefore we constantly strive to maintain and build strong relationships.” Richard Nelson, Public Relations Officer, who can be credited with bringing in much of the Company’s early business, puts it simply, “Communication, communication, communication.”

Challenges – “My job, as the owner is to remove obstacles faced by managers and their job as managers is to remove obstacles faced by supervisors and crews. The last five years have been a constant process of adding people, equipment and services, enabling us to deliver what the customer needs when they need it,” states McCreary. One of the major challenges for JMAC has been managing growth. McCreary states, “Early on it was difficult to find quality workers, but as time went on we managed to hire experienced operators and find quality managers.” Other challenges for JMAC included the need to depend upon other companies to help complete jobs for customers. McCreary stated, “We needed to become self reliant so we could control our own destiny and deliver for our customers.”

JMAC also encountered problems with material suppliers, equipment rental companies, contract mechanics and other general contractors not being willing or able to meet their customers’ needs. These problems were the catalyst that led to a new materials division which is now as large as any other in the Bakken, and a growing fleet of hundreds of pieces of heavy equipment serviced by a quality team of experienced in-house mechanics.

Business Lines – JMAC and its sister companies provide the following services:

*Heavy Civil includes various oilfield services, location construction, road building, large & small site grading, reserve pit construction and reclamation. Jason Ekblad, Project Manager, advises, “We construct roughly 100 oilfield locations per year, which consumes approximately ¾ of a million tons of gravel per year.”

*Underground Utilities includes municipal water and sewer construction & repair, oilfield location flow line construction and service, residential and commercial work.

*Aggregates or Materials includes production and sales of a variety of materials including scoria, road gravel, crushed, screened and washed products. Brandon Lerbakken, Materials Division Manager adds, “We have become a premiere aggregate supplier by producing the highest quality aggregate and strategically placed material sources to meet the various needs of oilfield and DOT work.” *Environmental services include oil spill clean ups, solidification of muds and sludges, special waste disposal, roll-off box services, fly ash & cement sales and delivery, trucking of materials for use in construction and cleanups at disposal sites.

*Trucking – JMAC and its affiliates move several million cubic yards of dirt, rock, waste and other materials, as well as thousands of tons of heavy equipment annually with a fleet of close to one hundred trucks and trailers.

Other Companies & Subsidiaries –

*On the environmental side, JMAC owns On-Site Maintenance (OSM). JMAC had always closed reserve pits and reclaimed pad sites using third parties to deliver fly ash for the solidification of cuttings. OSM was created to solve the problem of inconsistent delivery of fly ash. Creating a dry bulk hauling company was very difficult at a time when there were up to one year waits for dry bulk trailers. Based in Beulah, OSM has the ability to deliver over one hundred thousand tons of fly ash to the oilfield annually. As the industry trended toward pitless drill sites with solid control systems, OSM innovated by providing portable silos for their customers to use for short term storage in the solidification process.

* Located just outside of Williston on HWY 85, JMAC’s Indian Hill’s Disposal (IHD) Company disposes of hydrocarbon and salt impacted oilfield and industrial waste. They also offer a roll-off service for construction, demolition and household debris. IHD recently received an award for commitment and leadership in solid waste and recycling in North Dakota from the North Dakota Solid Waste & Recycling Association. Currently, they have several other landfill sites in various stages of the acquisition and the permitting process. “We consider ourselves stewards of the environment. It’s our job to do the best we can to take care of the waste generated by the activities in this economically privileged part of the country,” said Chris Kreger. “We challenge the entire industry to do the same!”

*Redland LLC is an affiliated real estate holding and development entity managed by JMAC employees and focused on real estate opportunities within North Dakota. Redland owns and leases over 100,000 square feet of commercial shop space as well as over 400 bedrooms through a combination of homes, townhomes, manufactured homes and man camp trailers for its employees, their families and other oilfield service companies. Redland LLC has also developed a 100 acre site industrial park, which is now home to several oilfield service companies and is in the process of permitting a 20 acre residential site in the City of Williston with over 100 residential lots, and has platted 160 one acre river view lots in McKenzie County just across the Missouri River from the City of Williston.

Shop Maintenance - A quality, well run shop is very important in such a harsh environment and JMAC has just that. It’s important to attract quality mechanics and technicians and to provide an efficient space to work protected from extreme temperatures. After a couple years in a 6000 square foot shop, JMAC acquired property and constructed a 30,000 square foot shop/office combination on 139th Ave. NW. in Williston, ND. With the new shop they are able to wash trucks weekly and each truck is examined by a night mechanic for minor repairs and preventative maintenance. This process ensures efficiency and keeps everybody running. The shop also affords JMAC the opportunity to keep its fleet of over 500 pieces of equipment in proper working order. There are not a lot of service providers in the Williston Basin and when something breaks down it’s imperative to have the ability to repair it as soon as possible.

Efficiency – In the first few years JMAC relied heavily on third party truckers. When it became apparent they needed more of their own trucks and trailers, they targeted the most efficient configuration that would work well given the significant weight restrictions put on early in the spring and sometimes lasting late in to the summer. They chose a combination of four axle trucks and long four axle trailers to maximize their hauling capacity under most conditions. This gave them the ability to haul more weight for their customers and thereby reduce their customer’s transportation costs. An added benefit of the larger loads is lower labor cost and fewer trucks required for the same job.

Employee Benefits - In order to attract the best employees in the market, JMAC offers a full range of benefits which include 401K contribution matching, company provided health insurance, paid vacation and lots of overtime. In addition to this, JMAC offers subsidized housing for their employees. Housing is a very important tool which allows JMAC to attract quality employees to support their growth. Judy Billehus, Human Resource Manager, commented, “We have a great team of dedicated and committed employees due to our custom benefit package as well as the company’s leadership and vision.”

Goals and Outlook – General Manager, Rob Krom, who oversees a majority of JMAC and affiliates operations says, “My goal for the company is to consistently and safely deliver quality products and services that fulfill customers’ needs while exceeding their expectations. JMAC Resources is a great place to work. It is imperative that we never lose sight of our goals to serve our customers while maintaining and developing a safety culture that puts people ahead of everything else.”

The outlook for JMAC is strong in spite of the tremendous increase in competition for all their services that has evolved over the last several years. The competition has helped sharpen their focus, skills and their results. In 2013 they are anticipating modest growth among all of their business lines.

McCreary wants everyone who works for JMAC and affiliates to be proud of their work, enjoy working together and to be proud of what they can all accomplish together. It is difficult for him to pinpoint their success, “As a company, we have been blessed with great opportunity, great employees with good attitudes, experienced managers and quality leadership at all levels. I can’t be more proud of what has been accomplished here and many times feel the least responsible for our success. I am extremely thankful to all our employees and customers that have played a role in building the Company.”

Greatest Accomplishments – “Above all the business accomplishments we have achieved as a company, I am proud of how our success has enabled us to provide our employees with well above average compensation levels. Our success has also given us all a great opportunity to give back to our community and to the less fortunate,” states owner McCreary.

JMAC is rolling out a new ‘pay it forward’ program for 2013. Locally JMAC is active in community organizations and is working on ways to provide coats to needy children in local schools, provide aid to those facing domestic abuse, and actively participate in cleanup projects sponsored by the city and industry affiliates. McCreary added, “It’s a great honor to be in a position to give to those who are truly in need.”