Closes Latest Deal – Acquires Canyon Services Group
“There is a reason drivers have a big windshield on the front of the car and a small rearview mirror. The large windshield represents your future while the small rearview mirror shows your past. In the business world, the rearview mirror is usually clearer than the windshield.” Warren Buffet (1930 –), American business magnate, investor, and philanthropist, considered by some to be one of the most successful investors in the world.
For one moment, let’s pretend that Trican Well Service (TSX: TCW) is a car driving through the ups-and-downs of the Canadian oilpatch. Its rearview mirror shows the organization growing from humble beginnings (when it purchased a small cementing company in Lloydminster) and took it public in 1996, when the price for West Texas Intermediate (WTI) crude was 20.46/bbl. As it passes the various significant road signs, it emerges today as one of this country’s largest oilfield servicing outfits, with a market capitalization of $1.52 billion (WTI $45.83/bbl).
Trican’s journey saw it establishing operating bases in South America, Europe, Russia, Australia, the Middle East, and Africa. Through its side mirror you spot its June, 2017 $637.0 million acquisition of Canyon Services Group. The big windshield symbolizes the future growth and prosperity the company has the potential to achieve, as it carefully steers through the next up-cycle.
According to Dale Dusterhoft, Trican’s president and CEO, the company was pleased with the overwhelming support given by the shareholders of both corporations. “The combination of the two companies creates a Western Canadian-based leading energy services firm that owns the premier asset base in Canadian pressure pumping and related services. We expect to continue Trican’s and Canyon’s focus on customer needs and provide best-in-class safety performance, service quality, and technology, that each company has become known for in the pressure pumping industry.”
In 2015 to 2016, during one of the worst oilpatch recessions in memory, Trican mirrored what many others were doing – sold under-performing or highly valued assets worldwide, including its: completions tools business, Russian and Kazakhstan operations, U.S. affiliate for $285.0 million, and exited from Algeria (WTI $41.85/bbl & $34.39/bbl), Colombia, Australia and Saudi Arabia. As the hydraulic fracturing business slumped, Trican’s board suspended its dividend and laid off 2,000 people. Yet on June 1, 2016 Trican announced it was going to the market to raise $40.0 million in equity financing and a short 21-days later, announced it was over-subscribed to the tune of $69.0 million.
One of Trican’s memorable road signs has been its brilliant R&D team, which has the mandate to help industry solve some of its most challenging downhole servicing issues. Established more than 20 years ago (WTI $18.64/bbl), its scientists have earned a spot as one of Canada’s Top 100 corporate R&D spenders for nine out of the past 10 years, says Re$earch Infosource.
In May, 2017 the Canadian Intellectual Property Office reported the company topped the list of applicants for shale oil and gas patents. Trican was quick to applaud Dr. Kewei Zhang, its principal research advisor and expert in hydraulic fracturing fluids, who was co-named as this country’s top inventor in this category.
During the past five years, Trican is proud to have developed more than 160 cementing and stimulation products, 45 coiled tubing innovations, and published 65 technical articles on acidizing, cementing, fracturing fluids and techniques, and reservoir characterization. In 2014, it won the New Technology award for its TriFrac-MLT™ (WTI $85.60/bbl), and broke records for pumping efficiency on a large multi-well completion job in the Horn River basin (NE BC). Its MVP Frac™ was successfully used 1,600 times in 2013 (WTI $91.17/bbl). That year it also acquired i-TEC Well Solutions to expand its downhole completion and tools, and signed a joint venture with GeoTomo LLC to offer integrated microseismic services.
In 2011, when Texas was abuzz with Eagle Ford shale production, Trican began operating deep coiled tubing units in the American oilpatch (WTI$87.04/bbl). The year before, it bought a private stimulation services company headquartered in Oklahoma and commercialized its MVP Frac™ proppant modifier into the marketplace (WTI $71.21/bbl).
Since the company was launched, WTI crude has averaged as low as $11.91/bbl (in 1998) and soared to highs of $136.31/bbl (June, 2008). Despite the ups-and-downs of this cyclical market, Trican has slowly and steadily mirrored the expansions and contractions of the Canadian oilpatch. And we salute them for their amazing accomplishments, helping operators solve some of their toughest drilling and completion challenges. The rearview mirror is clearer than the windshield.
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