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David Werklund was just 17 when he left his family's farm in Valleyview, Alta., to work on the oil rigs. It was the start of a career that has lasted more than four decades. After years on both oil and service rigs, and some time in Shell's production department, Werklund struck out on his own in 1970. He invested in a single truck and some tools, named the new company Dave's Oilfield Services and hired one other person. In 1979, he founded Concord Well Servicing with his partner, Gordon Vivian, and five years later he built its parent company, Canadian Crude Separators Inc., which went public in 1993. Werklund, 61, eventually transitioned the company into a trust in 2002 and renamed it CCS Income Trust. Things have gone well. In 2005, total revenue reached almost $1 billion, marking 100% growth in just three years.
Looking back on his success, Werklund says one thing stands out. “It's about having great people on our team,” he says. “The key is in our leadership, how we treat our people.” With 2,700 employees in four business divisions, Calgary-based CCS Income Trust is not a small company, which is why Werklund's people skills are so impressive. Raymond James analyst David Hyman, who has a Strong Buy rating on CCS, says Werklund's leadership style is all about empowering individuals. “It doesn't matter who he's talking to, he knows the names of all three of their kids and asks them detailed questions,” says Hyman. “It's always blown me away.”
What's blown some Canadian investors away in recent weeks is Ottawa's new stance on income trusts, which will have to start paying corporate taxes as of 2011. Hyman says CCS has weathered the Oct. 31 announcement reasonably well, partly because of one of the company's drawbacks: CCS has actually outgrown its trust structure, meaning it can't shelter all its earnings. “We have them paying about a 20% effective tax rate,” says Hyman. “The hit for them is relatively small, relative to their peers.” In fact, Hyman says that if CCS can't continue to grow in the trust structure, it may switch back to a corporate one.
For his part, Werklund isn't too concerned about the new rules. “We plan to continue to grow the company and build on the same principles we have in the past,” he says. And as for personal goals? “To live a life of learning, and I'm still learning.”
