Entrec Corporation has reported a year-on-year revenue increase for 2019, thanks to organic growth in the USA and the acquisition of Capstan Hauling in October 2018.
Higher activity levels in North Dakota, Colorado and Wyoming, along with improved pricing, were the largest drivers of growth in the USA, said Entrec. Offsetting the majority of this growth, however, was a revenue decline in Texas as the company stopped providing lump-sum rig moving services in the Permian Basin during the first quarter of 2019.
For 2020, Entrec’s outlook for its US business is positive. However, the recent sharp decline in crude oil prices precipitated by the coronavirus outbreak and OPEC trade war has caused significant uncertainty for the oil and gas industry. “At this stage, it is too early to tell what impact the decline in crude oil prices may have on activity levels in the oil and gas industry in 2020,” said Entrec.
In Canada, excluding the impact of the Capstan acquisition, the company experienced very poor operating results due to a number of negative macroeconomic factors. These included pipeline constraints, which have contributed to significant discounts in the market price for the oil produced in western Canada compared with other jurisdictions, as well as rising carbon taxes and increasing regulatory requirements to achieve government approvals for large industrial projects.
Entrec explained: “The downward pricing momentum experienced at the end of 2018, along with activity being restricted by limited takeaway capacity and production curtailments, resulted in oil and gas companies reducing their capital expenditures and drilling programs in 2019.”
Looking ahead, Entrec said it is cautiously optimistic about its business in Canada. The company added that it is seeing signs of increased capital spending by its customers in the oil and gas sector. Maintenance, repair, and operation (MRO) work in the Alberta oil sands region also represents a growing market.