CALGARY, AB – A leading provider of oilfield hauling services and equipment rentals to the energy industry has reported big drops in both profitability and revenue in the third quarter of the year.

Aveda Transportation and Energy Services Inc. lost $20.1 million compared to a loss of $398,000 a year earlier, as revenue fell 43.3 percent to $24.1 million, due to the significant slow-down in drilling activity experienced in the oil and gas sector and the drastic decline in the price of oil and natural gas.

During the three month period, Aveda said it implemented various cost management initiatives, including the elimination of 51 administrative and non-revenue generating positions in the field, including, corporate positions in Calgary and Houston, TX. In addition, Aveda closed its branch in Mineral Wells, TX and also merged its Cherokee, OK branch with its Oklahoma City, OK branch.

Aveda expects that it will generate operational savings of approximately $5 million annually as a result of the cost cuts.

For the first nine months of the year its losses totaled $15.4 million compared to a $1.8 million profit during the same time in 2014, while revenue declined 23.9 percent to $83.8 million. U.S. revenue decreased by 14.4 percent and Canadian revenue decreased by 57.7 percent which resulted in an overall revenue decrease of 23.9 percent.

“The current operating environment is challenging and difficult to navigate. We have successfully implemented various cost reductions which we expect will show in our fourth quarter results,” said David Werklund, executive chairman, interim president and CEO. “We are also seeing the benefits of our size and geographic footprint as we are being awarded various new contracts which should allow us to improve our results in 2016.”

According to Aveda, many industry experts have varying opinions on when oil and natural gas prices will start to rebound, however, the general consensus seems to suggest that the environment will remain challenging through the remainder of 2015, and most, if not all, of 2016.

In response to the current environment, Aveda says has taken aggressive measures to “right-size” its costs, including:

• Partially consolidating its Houston corporate office into Calgary;
• Consolidation of select terminal locations, including Cherokee, OK into Oklahoma City, OK and Mineral Wells, TX into Marshall, TX;
• Eliminating 51 administrative and non-revenue generating positions;
• Implementing multiple wage rollbacks at the corporate and field level, the initial adjustment made in second quarter of 2015;
• Restructuring US corporate benefits from a matching program to a monthly contribution maximum; and
• Evaluating other cost reduction measures such as converting selective salaried positions to a day rate/variable wage.

As part of the corporate office consolidation, Kevin Roycraft has left the company. In the interim, David Werklund, executive chairman, has stepped in as CEO as the company’s board searches for a permanent replacement.

Werklund, as founder and former CEO of Tervita (previously called CCS Corp.), brings to Aveda extensive experience in successfully leading companies through industry downturns, according to Aveda.

“Under Mr. Werklund’s leadership, Aveda will continue to actively explore additional cost cutting strategies,” the company said in a statement. “In addition, Aveda is exploring potential partnerships with like-minded operators who are willing to offer more favorable pricing in exchange for Aveda’s industry leading efficiency and safety record. Despite the aggressive cost cutting measures taken by Aveda, it is likely that the fourth quarter of 2015 will be EBITDA negative.”

More details are on the Aveda website.