OKOTOKS, Alta. – After two very challenging years, Mullen Group chairman and CEO Murray Mullen said 2017 will be a year of growth.
“I believe the outlook for the economy and the oil and gas industry has changed for the better and as such Mullen Group will benefit. South of our border a new administration has been elected, generating optimism that the US economy will enter a new faster growth phase,” Mullen said. “Furthermore, the oil and gas markets appear to be strengthening based upon improving supply/demand fundamentals along with the announcement by Saudi Arabia that they will essentially abandon a market share strategy in favour of a higher oil prices. Under this scenario our business will begin to recover after two very challenging years. In addition, we are well positioned to pursue acquisitions and recapture market share from competitors that have mispriced their services and are over leveraged. The timing of the recovery or acquisitions is somewhat elusive but I have a high degree of confidence that 2017 will be the beginning of growth for our organization once again.”
The company announced it is allocating a capital budget of $25 million for 2017, exclusive of corporate acquisitions. The money will go towards replacing trucks, trailers and specialized equipment in the trucking/logistics segment.
Mullen said he expects Canada’s GDP to expand moderately in 2017. He thinks pricing pressure will decrease through the year as capacity tightens and competitors leave the market due to cash flow issues.
The year ahead should also see improvements for the oilfield services segment, Mullen said, but it will be the latter part of 2017 before competitive prices are eased and supply/demand normalize.
Mullen said the company will complete more acquisitions in the year ahead.
“I am more optimistic today than I have been for a few years, in spite of the current market challenges,” Mullen said. “My optimism stems from the fact that the pricing environment for crude oil and natural gas has changed significantly over the past few weeks as evidence mounts that the supply/demand imbalances prevalent over the course of the last two years may finally be returning to levels that will support higher prices. If this trend continues it is very possible that the oil and gas service sector could recover much quicker than was expected just a few months ago.”