OKOTOKS, AB, Jan. 12, 2012 /CNW/ - (TSX:MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") announced today its capital expenditure plan for 2012 as approved by the Board of Directors. The Board of Directors considered, among other things, the current state of the economy, the prospects for continued drilling activity in western Canada and the backlog of major capital projects related to the development of Canada's oil sands and heavy oil resources. As a result, the capital budget for Mullen Group has been set at $100.0 million, an increase of approximately $25.0 million over the expected capital spent for 2011. This $100.0 million does not include any capital that may be required for acquisitions.
"This decision reflects not only our confidence in the long term prospects for the markets Mullen Group serves but also in our 27 independently operated business units. We want to ensure that our employees continue to have access to the best and most efficient equipment and have best in-class facilities in which to work, as these are integral components of our Quality initiatives", commented Murray K. Mullen, Chairman and Chief Executive Officer.
It is anticipated that the capital budget will be allocated as follows: $50.0 million to the Oilfield Services segment, $25.0 million to the Trucking/Logistics segment and $25.0 million for the further development of Mullen Group's network of facilities.
The majority of the Oilfield Services segment's planned capital expenditures will be deployed to further develop its operations related to well servicing and fracing support services with specialized equipment such as super heaters, hot oilers and combo units in addition to further expanding its "Pipeline on Wheels" through investment in fluid hauling equipment. Mullen Group will also deploy capital to enhance its fleet of trucks, trailers, and support equipment in its drilling and drilling related operations. Furthermore, Mullen Group will allocate capital to those business units that service the oil sands and infrastructure development sector to enhance its fleet of trucks, specialized hydraulic trailers, pumps and specialized equipment. The planned capital expenditure of $25.0 million in the Trucking/Logistics segment will be primarily used to replace trucks and trailers through the purchase of approximately 60 trucks and 200 trailers.
Mullen Group's investment in facilities includes its development of an industrial park in north-east Edmonton, Alberta that will facilitate the multi-modal movement of industrial and energy related products. In addition, Mullen Group plans to expand its maintenance and camp facilities in several markets serving the heavy oil resource plays in western Canada and it will continue to allocate funds to enhance its storage and warehousing facilities in the key resource plays in Alberta and British Columbia.
"Mullen Group believes it is a competitive advantage to own facilities in key strategic areas so when attractive opportunities arise they will be pursued. The commencement of the development of a transload and distribution centre in north-east Edmonton is an initiative that we believe will result in further opportunities to serve the Alberta market and thereby expand our presence in this growing market", stated Stephen H. Lockwood, President and Co-Chief Executive Officer. "The 2012 capital budget does not include any capital that may be required for acquisitions. We continue to see acquisition opportunities in our Oilfield Services segment and Trucking/Logistics segment. Mullen Group will continue to evaluate these opportunities and act upon those that meet our objectives of generating free cash and enhancing shareholder value", added Mr. Lockwood.
Mullen Group also announced today its intention to retain its practice of paying annual dividends of $1.00 per Common Share. Consistent with past practice, the Board of Directors will continue to determine on a quarterly basis the amount of, and record date for, the quarterly dividends.
"There are significant issues and challenges that continue to dominate the headlines, events well beyond our control. Here at the Mullen Group we are taking an optimistic view that 2012 will be another great year for our organization and we intend on taking full advantage of the opportunities. This is why our Board of Directors has determined that directing a larger portion of our free cash to our business units and leaving the annual dividend at its current level of $1.00 per share is the best overall value proposition for our shareholders at this time. Not only are we investing in our future, we strengthen the balance sheet, which is always a good thing to do", said Mr. Mullen.
This news release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas business and the overall economy. Mullen Group believes that the expectations reflected in this news release are reasonable, but results may be affected by a variety of variables. Mullen Group relies on litigation protection for "forward-looking" statements. Mullen Group is a company that owns a network of independently operated businesses.
Today the Mullen Group is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and as one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. Mullen Group provides management and financial expertise, technology and systems support to its independent businesses. Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL".
For further information:
Mr. Murray K. Mullen - Chairman of the Board and Chief Executive Officer
Mr. Stephen H. Lockwood - Co-Chief Executive Officer and President
Mr. P. Stephen Clark - Chief Financial Officer