Mullen Group cuts 2016 capital spending, dividend; cites hardship in the oilpatch

OKOTOKS, Alta. – The Mullen Group Ltd. (TSX:MTL) says it is slashing both its capital budget and dividend as the oilfield services company faced a “challenging and difficult” year in the oilpatch in 2015 and doesn’t expect any improvement in 2016.

In an announcement Wednesday after markets closed, the company said its board had approved a capital budget of $25 million for 2016, down $55 million from 2015.

It added that the majority of that budget will be focused on acquiring trucks, trailers and specialized equipment to support operations for its trucking/logistics segment.

Meanwhile, the company said it will cut its annual dividend to 96 cents from $1.20.

Chairman and CEO Murray Mullen said the company could have maintain the 2015 payout given its outlook for the markets its serves.

“However, this does not provide the margin of safety that I, or the board, believe is necessary given the challenges faced in light of the steep declines in commodity prices,” he said.

The board will continue to monitor economic conditions as well as the company’s financial results throughout 2016 to ensure that the ongoing dividend is sustainable, he added.