2007 offers mixed results for Mullen Group’s business segments

by Canadian Shipper

CALGARY, Alta. — Reduced drilling activity in Alberta’s oil and gas industries has taken its toll on Mullen Group, but the company has offset losses by diversifying into other market segments, the company reported in its 2007 financial results.

In its 2007 fiscal year, ended Dec. 31, 2007, Mullen Group generated consolidated revenues of $1.1 billion, up 11.6% over 2006. Operating income was also up 3.5% to $209.1 million. The company attributed the increase to the acquisitions of Kleysen Group and Brady Oilfield Services, as well as strong performances by the Production Services, Specialized Services and Drilling Services groups.

Lower drilling activity in Western Canada led to a decline in the Drilling Related Services group.

Mullen was also hit with a goodwill payment of $250 million and an intangible asset impairment of $25 million, resulting in a net loss of $118.7 million.

“We are very disappointed with the $275 million impairment of goodwill and intangible assets that was recognized,” said Stephen Lockwood, president and co-CEO of the group. “A number of factors came together to create this situation including the new SIFT legislation, new royalty regime in Alberta and depressed natural gas prices, and it is an issue that we are not happy about.”

However, Mullen was able to offset losses in some business groups with strong performances in others.

“The real story of 2007 was the strength of our diversified business model,” said Lockwood. “The significant loss in revenue and operating income experienced by our Drilling Related Services group by virtue of the decline in drilling activity was more than offset through increases in our other business.”

He pointed out the company’s trucking/logistics business experienced a significant increase in revenue and operating income in 2007.

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