OKOTOKS, ALBERTA--(Marketwired - March 31, 2017) - Mullen Group Ltd. (TSX:MTL) ("Mullen Group", "We", "Our" and/or the "Corporation") is pleased to announced that it acquired all of the issued and outstanding shares of Envolve Energy Services Corp. ("Envolve"), a privately owned well disposal company based in Grande Prairie, Alberta (the "Transaction"). Prior to the closing of this Transaction, Mullen Group owned 37.9 percent of Envolve.
Envolve provides well disposal services at a Class II facility located south of Grande Prairie, Alberta ("Envolve 1") that is capable of handling in excess of 1,000 cubic meters of fluid per day. Envolve 1 commenced operations in 2015 and is situated in the Montney resource play ("Montney") with ideal access from primary transportation routes.
- The acquisition of Envolve expands our service offering within our Oilfield Services segment. We believe that future drilling activity in western Canada will be focused in key resource plays, including the Montney, Duvernay and Deep Basin.
- Envolve's strategy of designing, building and commissioning new well disposal facilities mitigates the risk associated with legacy based well disposal locations ("New Build Strategy").
- Envolve is profitable and generates superior returns on capital employed ("ROCE"). Our expectation is that Envolve 1 will generate annual revenue of $8.0 million, a ROCE of approximately 25.0 percent and be immediately accretive to Mullen Group.
- The acquisition of Envolve provides Mullen Group with a new growth platform. We will use our strong balance sheet to fund additional facilities, built under the New Build Strategy. Our expectations are that each new facility will generate similar margins and ROCE as Envolve 1.
- Envolve has an exceptional management team, led by Dennis Warren, motivated to build Envolve into an industry leader.
- The handling and disposal of produced water is an industry that Mullen Group's senior executive team has experience.
- We expect a seamless integration into Mullen Group as Envolve was already using many of our shared services, including IT and accounting services.
"This is exactly the type of acquisition that we look for and validates why we make minority investments alongside entrepreneurs. Over the course of the last two years we worked in collaboration with the original founders of Envolve to define their business model and support the capital requirements of their New Build Strategy. Today I am pleased to announce that Mullen Group has acquired the remaining outstanding shares in Envolve from the founders. This acquisition will expand our footprint into what is recognized by many as one of the best resource plays in North America and more importantly it will provide our organization with a new growth platform. As drilling activity recovers from the latest downturn, additional strategically located disposal well facilities will undoubtably be required.
"Envolve has a first class disposal facility situated in an active drilling area, which is absolutely crucial to maximize the capital invested. More importantly from my perspective and the principle reason why we acquired full ownership in Envolve, is the quality of the people. They are talented, competitive and have a desire to grow the business. And we have the balance sheet to support their New Build Strategy. I want to especially acknowledge Murray Head, who had the vision to start and build Envolve. He convinced us two years ago that he could put together a first class management team and build a quality well disposal facility in the Grande Prairie region. He was right!" said Mr. Murray K. Mullen, Chairman and Chief Executive Officer.
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. The forward-looking information contained herein is made as of the date of this news release and Mullen Group disclaims any intent or obligation to update publicly any such forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable Canadian securities laws. Mullen Group relies on litigation protection for "forward-looking" statements.
Mullen Group is a company that owns a network of independently operated businesses. The Corporation is recognized as one of the leading suppliers of trucking and logistics services in Canada and provides a wide range of specialized transportation and related services to the oil and natural gas industry in western Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. The corporate office provides management and financial expertise, technology and systems support, shared services and strategic planning to its independent businesses.
Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.