Mullen feels impact of declining oil prices, says diversification will help weather storm

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OKOTOKS, Alta. — Mullen Group felt the impact of falling oil prices in the fourth quarter of 2014, with oilfield services revenue slipping 11.7% on the quarter and 3.1% on the full year.

Trucking/logistics revenue was up 3% in the third quarter and 3.1% for fiscal 2014.

Total revenue for the fourth quarter was $367.4 million, a decrease of $22.2 million.

Mullen said the decrease was due to lower demand for services related to large diameter pipeline construction projects and for fluid transportation to service wells. A decline in oil and gas drilling activity also negatively impacted Mullen.

Trucking/logistics revenue increased $4.2 million to $146.1 million on the quarter, thanks to increased demand for general freight services, the company reported. However, those gains were offset by lower demand for heavy-haul freight services in Western Canada.

In the fourth quarter, Mullen generated net income of $22.2 million, a 9.4% increase y-o-y.

“Our operating results in the fourth quarter reflect the challenges faced by the oil and gas industry in North America. The virtual collapse in crude oil and natural gas pricing, that began in earnest in September 2014, negatively impacts producers’ cash flow and investment activity, including capital projects as well as drilling programs. Lower activity levels accompanied by intense price competition are difficult challenges to overcome in the short term. Our fourth quarter results reflect a slowdown in our Oilfield Services segment,” said Mr. Murray K. Mullen, chairman and CEO.

Mullen said 2015 will be a tough year, however its diversification into areas outside oil and gas will help it maintain profitability.

“The two pillars of our strategic plan – maintaining a strong balance sheet and diversification through investing in both the oilfield sector as well as the trucking and logistics segment of the economy – have always been important elements to our success spanning over six decades,” Mullen said.

“With the oil and gas industry in the midst of what will most likely be a severe cyclical downturn, Mullen Group will allocate capital and pursue opportunities leveraged to the general economy. Our previously announced acquisitions are examples of how we are always looking at minimizing risk not just maximizing profitability in the short term. We fully expect 2015 will be a challenging year for anyone and any company involved in Canada’s oil and gas industry, including Mullen Group. However, we are diversified and we have a strong balance sheet with cash reserves of over $153.0 million and $75.0 million of unutilized bank lines, funds we will use to grow our business as strategic opportunities arise. We prepared for this downturn in 2014 and now we can begin planning for the future.”

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