OKOTOKS, Alta. — Mullen Group reported its second quarter earnings Tuesday and they reflected the woeful state of Canada’s oil and gas industry.
Revenue in the oilfield services division was down 36.8% to $111.2 million compared to the second quarter of 2014. The trucking/logistics sector, however, enjoyed a 26.3% increase in revenue to $174.1 million.
Net income for the company was down 96.5% year-over-year during the second quarter, to $900,000, compared to $25.6 million during the same period last year.
For the six-month period ending June 30, Mullen’s net income was down 94% to $3.7 million.
Of course, much of the decline was due to the reduction in oil and gas drilling activity. Those losses were partially offset by stronger revenues in the trucking/logistics segment, which were bolstered with the acquisitions of Gardewine Group and Bernard Transport.
Chairman and CEO Murray Mullen outlined some of the headwinds facing the company.
“Our Trucking/Logistics segment continues to produce positive results, including record operating income of $29.4 million and higher margins,” he said.
“I am most pleased with these results given the state of the economy, which continues to underperform. In particular, the Alberta economy is in the midst of a significant slowdown making this performance even more impressive. Unfortunately, our overall results continue to be negatively impacted by the slowdown in capital spending and drilling activity by the oil and natural gas industry in western Canada, which remains under tremendous stress due to low oil and natural gas prices. Nevertheless, we adjusted to the realities of the market in what I can only describe as very challenging. Our strategy of operating a diversified business model accompanied by the initiatives we implemented last year allowed Mullen Group to minimize the impacts of the slowdown in our oilfield related business.”
Mullen offered no insight into when conditions in Canada’s oilpatch could improve.
“These are very difficult times for anyone involved in the oil and natural gas industry, which I expect will continue until oil and natural gas prices recover from current levels. The timing of the recovery remains uncertain, however we have experienced cyclical downturns many times and will manage our business appropriately,” Mullen said. “Fortunately, we strengthened our balance sheet last year and completed some timely acquisitions focused on the trucking and logistics sector, providing at least some positive in an otherwise pretty difficult market environment. We are well positioned to take advantage of future opportunities that will inevitably arise.”