OKOTOKS, Alta. — Mullen Group has approved a capital budget of $25 million for 2016, which will primarily be used to purchase new trucks and trailers for operations within its trucking/logistics segment.
Its spending is being reduced by $55 million compared to 2015.
“2015 has been both challenging and difficult for anyone associated with the oil and gas industry. Unfortunately I believe 2016 will not be any better. Crude oil and gas prices are at levels that have a significant negative impact on oil and gas producers. As industry cash flows decline, capital investment and drilling programs – two very important demand drivers for the oil and gas services sector – are slashed,” said Murray Mullen, chairman of the board and CEO.
“Our business plan for 2016 reflects this reality. Nevertheless, our company is well positioned to manage through this very challenging cycle primarily due to our diversified business model, and well-structured balance sheet with over $140.0 million of cash on hand. Our Trucking/Logistics segment is on track for a record year in 2015 and I expect another solid year in 2016.”
Looking ahead, Mullen projected some slowing in the trucking/logistics segment in 2016, as Alberta’s economy contracts. Competitive pricing pressures in Western Canada may put pressure on pricing, Mullen acknowledged.
Mullen also indicated its oilfield services segment will likely be down from this year in 2016, due to continued weakness in commodity prices and competitive pricing. However, Mullen hopes its Premay Pipeline Hauling operation will remain active, primarily due to the replacement of pipeline.
Mullen also reduced its dividend from $1.20 per share to 96 cents.