A grievous foot injury forced Garnet Amundson off the rigs; he worked his way back into the oilpatch via the boardroom.
Amundson, who grew up in Red Deer, is president and chief executive officer of Essential Energy Services Ltd. (TSX: ESN) — one of the largest service rig providers in Canada.
The Calgary company’s well-servicing division boasts 52 service rigs, 23 rod rigs, 33 coil tubing rigs and 10 nitrogen pumpers.
Its downhole services and rentals division supports drilling, completion and production operations, including sales and servicing of downhole tools like multi-stage fracturing systems, and it has 20 wireline trucks.
Red Deer plays an important role in Essential’s well-servicing division, said Amundson, who pulled out a map to show how the oil-rich Cardium and Viking formations stretch across Central Alberta like the wings of a butterfly. Red Deer sits in the middle.
“It’s a very key, central hub for us.”
Amundson wasted no time leaving the city three decades ago, attracted by the lure of big money further north.
“Literally, five days after I got out of high school I loaded up in my ‘65 Ford Fairlane with a buddy and we went out to Grande Prairie and drove rig to rig asking for work.”
He was forced to return to Red Deer less than a year later when his left foot was mangled in a rig accident.
“It made me a lot more receptive to the concept of post-secondary education,” acknowledged Amundson.
After earning a business degree from the University of Calgary, he became a chartered accountant, working for Ernst & Young for about 10 years. He later joined Talisman Energy Inc., followed by stints with Canadian Hunter Explorations (now part of Burlington Resources) and fertilizer giant Agrium Inc.
In 2004, Amundson launched an ambitious plan with three partners to buy nine oilfield service companies and take them public as Builders Energy Services Trust.
“It was a $100-million IPO (initial public offering),” he said, recalling the challenge of closing the nine deals concurrent with the IPO.
“If any one of them had dropped out, we didn’t have enough critical mass to do our IPO.”
Builders entered the TSX at $10 and climbed to nearly double that price by the end of 2005.
“We were actually the third-highest returning stock on the TSX that first year.”
In April 2008, Builders combined with another multi-business trust — Essential Energy Services Trust. The new entity kept Essential’s name and most of Builders’ management team and board.
Soon after, Essential sold its transport division to Mullen Group Income Fund for $135 million in cash — a fortuitous move in light of the industry downturn that followed.
“We were extremely fortunate to have done that deal right at the peak,” said Amundson, pointing out that Essential emerged from the recession with no long-term or current debt.
Essential converted into a corporation last April and has enjoyed strong demand for its services — particularly its coil-tubing assets that are used for horizontal drilling.
“That business had just a fantastic year in 2010.”
Labour has been a challenge. Essential, like most of its counterparts in the oil and gas sector, was forced to make deep staffing cuts during the downturn.
With a current payroll of about 780, the company is only able to support an equipment utilization rate of about 65 to 68 per cent.
“Our industry, with the types of services we provide, should be able to operate up to about an 85 per cent utilization,” said Amundson. “So there’s about a 20 per cent utilization gap that we would like to fill, but can’t find enough good people.”
Essential is taking steps to diversify its operations to help blunt the impact of future downturns. In November, it sent 22 truckloads of equipment to Colombia, via Houston, Tex.
The equipment is expected to be in the field this quarter, and operating commercially soon after.
Dale Jehn, general manager of Essential’s coil tubing division in Red Deer, will oversee operations in Colombia. He left for his new posting last Sunday.
Amundson sees a huge up-side in Colombia, with strong demand for Essential’s services there and abundant oil reserves.
“Our guys have said it’s like Alberta was 20 or 25 years ago, from a reservoir and industry development perspective.”
He added that the South American country is no longer a dangerous place to operate, thanks to political changes nearly a decade ago.
“It’s been politically stable since 2002.
Despite working in Calgary, Amundson still makes regular trips to Red Deer for business and to visit his parents, Roy and Bev Amundson. He’s quick to downplay his role in Essential’s success, crediting instead the people who perform the work he tried 30-plus years ago.
“There’s not a lot of people who are in my role that have actually pulled pipe on a rig in Grande Prairie in 30-below weather, so I appreciate what those guys do every day.”
hrichards@www.reddeeradvocate.com