CALGARY — They say this industry is cyclical. That’s as true as ever for Alberta’s Producers Oilfield, which has agreed to merge with the trucking company that once spawned it.

Mullen Group Income Fund and Producers Oilfield Services Inc. — two of the largest carriers in Alberta’s oil-rich energy sector — have announced that their respective boards have approved an agreement that will result in each Producers share being converted into 0.4444 Mullen Trust Units or Mullen LP Units.

It is also contemplated, as part of the transaction, that the assets of Mullen and Producers associated with the far north will be transferred into a separate public company, the details of which have yet to be finalized. Both companies expect combined revenues will exceed $1.0 billion as a result of the deal.

Patch Work: Producers finds itself right where it started

The agreement is subject to regulatory and unitholder approval.

“This is a wonderful opportunity to bring together two strong, well managed western Canadian businesses,” Stephen H. Lockwood, President and Co-CEO of Mullen. “It is rare that you can bring together two companies and two management teams of this quality.”

It is expected that the new public company holding the Far North assets will be led by Ric Peterson, CEO of Producers. “To continue creating value for our shareholders we felt we needed to continue to grow our company but we also needed to look at our overall structure. This led us to consider the income trust model,” he said in a statement.

Producers was actually born as an offshoot of Mullen. In 2001, Mullen spun off a logistics business called Moveitonline, which was supposed to be a provider of trucking software and an online resource, but it foundered until it was purchased another company called Patch Point Enterprise in 2003. Patch Point provided waste disposal as well as other services to the oil patch.

That part of the business seemed to be profitable, and then, in 2004, Movitonline changed its name to Producers Oilfield Services. The chair was none other than Murray Mullen. Producers bought Ric Peterson’s privately held Formula Trucking out of Grande Prairie and made Peterson president of Producers.

Then they parted ways. In an interview with Today’s Trucking a couple days ago for the magazine’s annual March issue Top 100 carrier list, Murray Mullen said: “I left because Ric Peterson didn’t need anyone to baby sit him … he is a keen competitor and astute businessman.”

And now they’re together again. When the merger is finalized, the companies would form the third largest for-hire carrier with 6,609 total tractors, trailers, straight trucks and owner-operators — behind only Vitran (7,380) and the top company TransForce (12,183).

(Check out the entire list and a profile of Mullen-Producers in the upcoming March issue of Today’s Trucking due out in a few weeks).

Both Mullen and Producers have agreed that they will not solicit or initiate any discussions concerning the sale of material assets or the pursuit of any other business combination. Mullen and Producers have each agreed to pay a non-completion fee of $30 million to the other in certain circumstances. In addition, each party has the right to match any competing proposal for the other, in the event such a proposal is made.