ASUG recently sat down with Umar Farooq, the vice president of information technology at NexTier Oilfield Solutions. NexTier was born out of a merger between C&J Energy Services and Keane Group. The organization leveraged SAP S/4HANA to help bridge the legacy companies together and bring its users under the same umbrella.
In the first part of this interview, Farooq told us about the background behind the merger and some of the hurdles the organization had to overcome.
ASUG: Tell us a little bit about your background and how it's prepared you for your current role.
Umar: I joined NexTier as part of the C&J Energy Services company in 2019 before the merger. And I came from a consulting background, having spent 10 years with Deloitte Consulting, primarily managing SAP-related projects in the oil and gas industry. Before that, I've been working in the SAP ecosystem for almost 20 years. My background is primarily in business transformation, consulting, SAP-driven deployment, global deployments, and problem-solving sales and distribution modules integrated with supply chain and finance.
ASUG: Correct me if I'm wrong, but NexTier came about because of a merger between Keane Group and C&J Energy Services, right?
Umar: That is correct. We merged the two great companies in November of 2019 and it was a merger of equals. That's what formed NexTier.
ASUG: Can you tell us a little bit about where this merger came from and how big is the resulting organization?
Umar: The merger primarily was driven by the synergies that both companies had over a period of time working as dominant frack operators. Keane Group has been operating in this space since 2011 and C&J Energy Services began in 2010. Over a period of time, both companies started working more towards integrated solutions and that's where both companies started working by including wireline, qual-tubing, cement, and some of those other activities that support the well operations. It's almost natural when you see two companies working in the same space marketplace to find some more synergies among themselves. That’s what started this merger of the equals between two companies. From that point onwards, NexTier was set to be one of the major players, especially when it comes to shale-type operations. We operate in all the different basins, such as Permian Basin and Eagle Ford Basin. We even have a presence up in northeast United States.
The goal was to have an integrated, one-stop-shop type of company that provides the best value to its customers. That's our vision from our company's leadership perspective. As soon as we set off on this journey, we got hit by a pandemic. The oil price was impacted due to the pandemic and then operations slowed down. At one point in early 2020, we were operating roughly around 703 rigs in the US lines. That dropped down to 83 rigs the next month. That's how big the impact of COVID-19 was.
Everything got shrunk in terms of operations. We had to match the pace that our customers were going to operate on. That posed a very unique challenge for us, especially when two companies combined. We had a lot of great plans in terms of how we wanted to operate. But we had to quickly adjust. Once we saw what our customers were doing, we had to match that pace. This process drove us to make some operational changes very early on in the merger, and position ourselves for the future. Back in March 2020, we knew where the market was going to go in the next few quarters, and it was not going to be a pretty picture. So, we modified ourselves and started thinking about, from an operational perspective, what are some of the key things that we need to account for to make sure we're ready to support the customers for our ongoing activities, as well as what will be planned later from our forecast perspective.
One of the key projects that we started right at the start of the merger was simplifying our operations support by redesigning some of the processes within SAP. We took a very hard look at that particular initiative. And we felt very strongly that we should continue with that project because it was something that would help us when we were ready for growth. With that project, we had an implementation partner in Accenture that was helping us through the merger, and then they also started transitioning a little bit of work towards the project. We had strong support from SAP. The account executive team was ready to go help us out in any shape or form that they could. Then we started the journey on simplifying the processes in our core ERP system, which was important because we knew what it would add as far as the value was concerned.
Today, we're seeing the change in the marketplace where the price of oil and rig counts are going up—around 400 rigs, a huge increase from 83 in March 2020. We're not at the same levels where we were before COVID-19, but we're seeing a huge increase in activities. We started positioning ourselves in terms of other integrative solutions that we can provide our customers. This year, our CFO and CEO announced that we are including a CNG operation into the integrated solutions that we provide our customers. That's where NexTier is envisioning to go in the future. We had those plans right after the merger, but we had to take a pause and re-strategize ourselves in terms of what's more important for short-term as well as the long-term operations.
ASUG: Before the merger, both Keane Group and C&J Energy Services were utilizing SAP ERP systems. Can you describe those environments for me?
Umar: Keane Group was on SAP Business One, and the organization went through an upgrade effort with SAP Business ByDesign. Around the time that they were planning to go live is when the merger deal was announced then we started to work on getting the two companies combined together. That project was put on pause and they never went live with SAP Business ByDesign. They were operational in SAP Business One, which continued into the merger. The legacy C&J Energy Services ERP system was SAP Business One as well. The organization had SAP R/3 implemented back in 2016 and 2017, and it upgraded to SAP S/4 HANA 1709 version in 2019. It went live in 2019 and SAP was a very integral part of legacy C&J Energy Services. The company had SAP S/4HANA as the core system of records, financial supply chain sales, and other activities. It was also using SAP SuccessFactors, SAP Time and Attendance, SAP Concur, and SAP Ariba. C&J Energy Services had a lot of SAP applications that were part of the legacy ecosystem of applications. We had a really big SAP footprint in terms of tools and applications that were with both of the companies.
ASUG: How long did this merger take? What were some of the most significant complications that you all had to overcome?
Umar: As you could imagine, when it comes to the merger, each function has to identify the processes that they all operate under and then find out what the commonalities are. Both C&J Energy Services and Keane Group operated in the same market space. So, our customers and vendors were alike. I would say it took at least six to eight months for the whole merger activities to be completed. And some of the activities went on even after the merger was announced and the ERP redesign and re-implement effort was part of that initiative. From an IT organization perspective, in both companies combined, at the start of the merger, we had about 8,000 employees. Not all of them were system users obviously, but we were looking at about 6,500 to 7,000 IT users. These are the users that have emails, laptops, cell phones, and tablets that all required support. There were also a lot of legacy homegrown applications from both companies. Some had overlapping synergies and others were just totally different in terms of their usage. Both companies were big consumers of Microsoft products across the board and that continued even after the merger.