CEO Blog

We began operations in 2003, with 6 employees in Medicine Hat offering instrumentation and electrical services.  In 2011, with approximately 140 employees and contractors based in multiple locations across Western Canada, we continue to offer instrumentation and electrical services, as well as fabrication of process equipment and automation services and products.  I am very pleased with the growth, and would like to acknowledge the hard work and dedication of the employees and support of our customers, who helped to make it happen. 

Thank you.

Cam Marshall
President and CEO

Our oil and gas industry is once again “popping”.  With oil above $100/barrel and indicators showing that gas will rebound, we are seeing a great deal of optimism and excitement in many regions.  Within Global Flow, as well, there is a great deal of excitement over the opening of our new process equipment facility. Global Flow is known as a leader in the fabrication and automation sectors across the Western Canadian Sedimentary Basin, and with the consolidation of Entegra Controls, Global Flow is now the premiere integrated service provider for producers. The synergistic value that we offer to our customers through automation, controls, and process equipment is why Global Flow will remain the leader in the industry. We would like to thank our employees, vendors and our customers for helping Global Flow to achieve this milestone.

Bruce McKenna

Sales Manager

Although I continue to be cautious when predicting the future, the signs are that we are headed into a more balanced market. Our Q-1 is off to a great start and it seems as though the worst is now behind us, but we won’t know for sure until the end of Q-2 (June or July).

Some positive signs which lead to my cautious optimism include the following:

• We are now starting to see natural gas supply side declines in the US.

• Natural Gas supply in the WCSB is down 10% compared to last year.

• Demand for natural gas is up in both Canada and the US.

• Regulatory and environmental issues will likely lead to increased costs in the Marcellus and Haynesville shale gas plays, resulting in lower drilling activity in the Eastern US.

• Oil prices are above $75/bbl, and expectations are in the $70 to $85 range for the remainder of the year. This will lend itself to a robust service and maintenance revenue stream.

• Oil drilling activity levels are now at healthy levels. We are anticipating continued drilling activity in SE and SW Sask. Our Lloydminster branch is now beginning to see an uptick in activity levels due to heavy oil economics. We are experiencing some good revenue opportunities in SW Manitoba.

• Drilling and completion costs have come down, resulting in an economic model that will support drilling programs at lower commodity prices. Junior E&P’s are figuring out how to make money at $5 gas.

• Our service and maintenance revenue stream has now returned to pre-crash levels and we feel that this will continue.

• Although drilling rig activity in the U.S. and Canada is still down approximately 50% compared to one year ago, the rig count is beginning to climb.

• Through the downturn in 2009, we have done a very good job of expanding our customer base.

Expectations are that the WCSB will see 10,000 to 11,000 wells drilled in 2010 (versus approximately 9000 wells drilled in 2009), and that drilling levels will eventually get back to a range of 11,000 to 14,000 wells drilled per year.

The number of natural gas wells completed per quarter should be much more linear in 2010 than it was in 2009. Only 400 natural gas wells were completed

in Q-3 of 2009, which led to the worst quarter that I have experienced in my career. In 2009, 3200 oil wells were completed. This trend was linear throughout the year. We are expecting increased activity for oil well completions this year.

That being said, 2010 remains a wild card. For the first time in decades, there will be more oil wells drilled than gas. Natural gas drilling activity levels for the next 12 months will be moderate at current prices. We will not see a substantive increase in activity levels until the price moves above $6.00/mmcf, which we anticipate will be well into the third quarter of 2010 at the earliest.

Also, keep in mind that service company capacity is down more than 20% from the peak of 2007.

Maverick Group results remained positive, despite a very challenging year in an industry that has seen a great deal of contraction in activity levels. This is a testament to the stability and strength of the Maverick Group business model. It also speaks to the quality and commitment of our employees.

Overall, in the fiscal year we have just completed, we experienced an increase in Maverick Group revenue by approximately 15%. This is a very respectable figure, considering activity levels were about 30% less than the previous year.

Operations Report

Q-3

Q-4

The fourth quarter was a record Quarter for the Maverick Group, in revenue and profitability. Many of our people worked long hours and spent much time away from home. I would like to thank everyone for their hard work and dedication.

Looking Forward We are anticipating that oil and gas producers will shift investment dollars into the provinces of British Columbia and Saskatchewan. The Maverick Group is well positioned to take advantage of this change. You can expect to see us increasing our presence in Northeast British Columbia and Southwest Saskatchewan this year. Oil is trading at record levels and natural gas is currently back above the $9 mark.

In addition, the most positive sign we are seeing of an industry recovery is that the future of the gas market, on deliveries for January of 2009, 10 months out, is north of $10.

The management team has put forward budgets that show us increasing our Maverick Group revenues this fiscal year over last by 35%. This year is looking very good. Please be sure to take some holidays this summer, as we are anticipating a very busy fall. Welcome aboard to all new staff members. Everyone have a safe and successful spring.