Move will reduce annual revenues by up to $25 million but also cut losses.
MONTREAL – Trucking and courier company TransForce is getting out of the rig-moving business in Canada early next year as it tries to stem losses by focusing on its growing US operations.
“It’s a tough market; the pricing pressure is very, very hard there on the rig-moving side,” CEO Alain Bedard said in a conference call to discuss its third-quarter results.
The move will reduce annual revenues by up to $25 million but also cut losses. It sold $5 million in equipment in the quarter, raising its total for the year to $12 million. TransForce will continue to provide other services to Alberta’s oil sands sectors for which it receives about $100 million in annual revenues.
While the US market has been “really soft” this year, Bedard said his team if very confident that the oil drilling environment will slowly improve next year as the number of competitors is reduced.
“Guys are just walking away and saying the gold rush is over,” he said, noting that TransForce did very well in the Bakken region, in North Dakota and Montana, for nearly a decade until about 18 months ago.
Exiting the business of moving drilling rigs and equipment for oil field companies and contractors will allow TransForce to focus on business opportunities that can generate cash, he said, pointing to the August acquisition of Texas-based E.L. Farmer, a pipe storage and hauling specialist.
“That’s why I’m very confident that we will deliver a way better year because this year 2013 has been a disaster for us,” he said.
©The Canadian Press