Published On: Tuesday, 01 December 2015

Bonnetts Energy Corp.: Delivery Well Ahead

Bonnetts Energy Corp.: Delivery Well Ahead
Bonnett’s Energy Corp. currently has approximately 250 employees working at sites across Alberta and Northeastern British Columbia

FORT ST. JOHN – “Delivery Well Ahead” is what Bonnetts Energy Corp. is all about.

The company, founded in Fort St. John in 1972 by Gerald and Dianne Bonnett, is a trusted name in downhole operations, as a leading provider of slickline services.

Bonnetts Energy Corp. is one of the larger homegrown oil field services companies in Canada and is part of a small army of technical specialist firms working to ensure the viability and marketability of the nation’s oil and gas industry. The company now operates with seven independent but inter-related divisions to provide a broad spectrum of technical, data collection and operational services to the major oil and gas producers in the country. The divisions are: Bonnetts Well Intel, Boreal Testing, Redneckz Wireline, Boreal Pumping, Silverline Swabbing, Bonnetts Wireline and Boreal E-line.

The company has built strong roots in each of the communities it serves in B.C. and throughout Alberta (head office is in Grand Prairie, Alberta), while focusing on the safety of its employees, the environment, and providing a premium quality of service to customers.

It also knows the importance of being able to adapt quickly in an industry that historically has more than its share of ups and downs. Its management team is skilled to adjust the company to meet customer needs and the fluctuations of the oil and gas industry.

SOLID LEADERSHIP

Murray Toews has been President since 1998 and Chief Executive Officer since 2005.

Toews was raised working on his family’s grain farm before moving to the energy sector. He literally grew up in the Bonnetts Energy Corp. business, starting at the back of the shop and moving up to General Manager, and eventually, becoming an owner, along with Kelvin Torgerson.

“I still feel comfortable walking to the back of the shop to see what’s going on today,” he says. “You’ve got to understand people and the equipment that we use, and I do, because of my experience. In the field and days in the shop, some days I wish we were only three units and my job was that one customer, one location, one crew and the job at hand was all that mattered. With the success of the business, some days that day on location was fun, simple and a lot less stress.”

Chief Operating Officer Troy Tews has been with Bonnetts since 2006, coming to the firm after working for a multinational company in various locations throughout the world, in a variety of positions. His skill set derived from a wide variety of experiences has benefitted Bonnetts, helping them adapt to the ever-changing marketplace. He meshes well with Toews.

“Murray and I work so well together. We complement each other,” he says. “I’ve known Murray since I was a kid. I decided I was coming back to the area, and we connected through non-business related functions.

“I’ve worked in a lot of places where things changed quickly, so it’s no different from where we are today,” he says. “With me having been part of large, international service providers, I try to bring that to the table.”

Adds Toews: “Troy brings consistency and the ability to maintain a strong, safe work environment for all the divisions at Bonnetts. Troy crossed all the T’s and dots all the I’s. I know I sleep better at night since Troy joined Bonnetts.”

Chief Financial Officer Carrie Lonardelli notes the management team at Bonnetts keeps a careful eye on costs, which enables the company to weather the typical ups and downs that face resource-based industries.

“We make sure that we’re sizing right, and that we have cost efficiencies across the board. We centralize our purchasing, streamline our vendors, and do what we need to do,” she says. “When times are tough, we get pressures from our customers on pricing, so we do standard cost-cutting across the board.”

Lonardelli adds that Bonnetts “provides very thorough training for our staff, to make sure they keep up with core competencies”, which also helps the bottom line through more efficient work processes.

Carrie has a very strong control background and her warmth towards the staff makes for a well functioning executive team.

Safety, as always, is a priority. “We have good people, and we make sure our staff gets safely home to be with their families,” notes Tews. “We’re always pushing the safety side of the business, and we’re getting better every day at that.

The company’s secrets to success start with looking after customers’ needs, and instilling policies and procedures to ensure the safety of workers.

To that, Toews adds: “Being fair and honest to the company. Respect it and don’t neglect it, and it will look after you and your family and everyone else connected with it.”

PLENTY OF EXPERTISE

A specialist in providing so-called ‘downhole’ operations, Bonnetts Energy Corp.’s various corporate divisions are routinely tasked with delivering a diverse range of services that typically involve either sending some tool or technology down an already drilled well hole (such as for data collection, cleaning or hole preparation) or for removing some object or tool that has negatively impacted the operation of the well, referred to as fishing.

“The bulk of the services we provide in northern British Columbia involves slickline services, swabbing services, electric line services, fluid and nitrogen pumping services, testing services,” says Sales Manager Jeff Foster. “Our total head count across the company is about 250, that ranges from smaller bases to larger ones but that’s our total head count.

“All of the services we provide throughout Northeastern BC are based on the demand of the customers. There are some significant customers working in the area like the Progresses (Progress Energy Canada Ltd) of the world and so on so it really depends on your customer base and what services you’re providing out of it.”

“Basically we started out as a slick-line company, progressed from a three-unit operation when Murray and his partners purchased it (in 1998). It continued to grow and added well testing services in 1999. In essence we’re a services side support company for the oil and gas industry,” stated Tews, the COO.

PRIVATE, PUBLIC, PRIVATE

Bonnetts was a private company when Gerald and Dianne Bonnett started it in 1972. Toews and two partners purchased it in 1998, turned it public in 2005, and have since returned it to its private roots, with Toews and Tews as owners along with their majority shareholder, Mill City Capital.

The Initial Public Offering (IPO) placed Bonnetts as an Income Trust, and the stock rose from $10 to $30 per share in just 18 months. The federal government’s dissolution of income trusts and other factors drove the stock price lower, paving the way for the purchase of all remaining shares in 2009 by Toews, Tews and Mill City Capital. The privatization of Bonnetts was led by Mill City Capital.

“There was so much equity held within a small group that the stock was never traded like a public company because nobody ever sold their shares,” Toews recalls. “We needed to be able to move as well. Being a private company now, we can move a little quicker.”

Back when he first started with Bonnetts, Toews could see the company’s potential.

“I saw this company could really grow, but I would have never thought that we would have 500 employees in its hey-day,” he says, adding there are now around 250 workers on the payroll. “As he mentored me, Gerald was very open with me about how much money we spent and how much we could make. Gerald always said a slickline truck was the best kept secret in the oil and gas industry.”

ENORMOUS POTENTIAL

The Canadian oil and gas sector is a giant factor in Canada’s fiscal picture, injecting more than $129 billion into the national economy in 2013, according to statistics released by the Canadian Energy Pipeline Association (CEPA). That sum (including the contribution of the mining industry) accounted for more than 27 percent of the entire Canadian Gross Domestic Product (GDP) placing the energy sector second only to the manufacturing industry (35 percent) in terms of monetary contribution.

“The energy sector contributes significantly to the strength of Canada’s overall economy, and adequate and reliable pipeline infrastructure is critical to Canada’s economy. The oil, gas and mining sector accounts for more than one quarter of the value of Canada’s goods-producing economy,” as stated on the CEPA website.

“Through royalties, land payments, corporate and personal taxes, the oil and gas sector is a large generator of funds that our federal and provincial governments use to pay for essential programs and services such as health care, education, CPP and many other government programs.”

No matter how it’s examined, the Canadian oil and gas industry is big business. Information released by Natural Resources Canada (NRCAN) shows that Canada has become the world’s fifth-largest producer and the fourth-largest exporter of natural gas. As part of a fully integrated and continental natural gas market, Canada moves its natural gas resources seamlessly across provincial and national borders, from supply basins to demand centres thanks to a network of pipelines and other infrastructures.

A brief industry snapshot provide by NRCAN shows that 92 percent of all Canadian energy exports are destined for markets in the United States, exports with an annual price tag of more than $118 billion. In addition the biggest segment of government revenues is collected from the nation’s oil and gas industry, a sum that has averaged $23.3 billion during the past five years.

But the influence from and the decisions made by the various political levels have a direct impact on the industry as a whole. Most recently the as yet unknown political direction to be taken by the newly elected federal Liberal government, and the policies already introduced by the Alberta NDP government have Bonnetts taking a “wait and see” position.

ADAPTING TO THE MARKETPLACE

While not as large as multinational players in the industry, Bonnetts Energy Corp. is considerably larger than many of its oil industry service sector competitors, which positions it to be more adaptive to any pending changes in the national oil and gas marketplace.

“We’re large enough to have the flexibility we want with our producers, its companies like ours they have the confidence in. We can offer the better service and have the best people in place to do the job. The industry certainly is in a state of flux right now, with much of it coming back to the political side and uncertainly over how the different levels of government are going to impact the industry,” Toews said.

One of the other keys to the company’s long range success and growth hinges on its willingness to embrace change, to adapt to the latest technologies and to invest in ongoing training of its greatest asset, its employees.

“We’re sized right to keep us working steady, but we’re at 250 people so you’d better hope that we have determined that we’re sized right, if we’re not then we’ve got even bigger problems,” he said.

“At the corporate level we feel we’re sized right to work steady, which wouldn’t have been the case if we were still at the 500 person mark we were back in 2006. The problem is if there is growth and we need to expand again a lot of the skilled people have moved on. People who have left the industry have moved into the forestry sector or agriculture which is big up this way. They’ve had a change of life and have moved onto other areas, so it’s hard to get those kinds of people back and training new ones takes time.”

For Bonnetts it makes sound fiscal sense to keep its existing workers happy and trained on the latest equipment and technology as beginning the training process with new people is costly both in terms of money and time.

“It’s complex and expensive work training new people up to those standards,” Foster explained. “It’s not easy and it’s not without expense.”

EXPANDED SERVICES

Key areas of the many technical services provided by Bonnetts can be roughly broken down into niches described by the company as: Well Intelligence, Testing, Slickline, Pumping, Pumpdown, Swabbing and Electric Line. Each of these service areas address specific needs identified by the oil and gas producers, requiring specialized mobile equipment as well as the highly trained crews needed to operate them to fulfill their ongoing contracts.

Well Intelligence, for example, will involve the collection of a vast accumulation of information that examines all aspects of a well’s technical health, pressure levels, casing condition and others. Slickline involves sending specialized tools directly down well holes from the company’s state of the art vehicles to address specific needs, including information collection and the removal of unwanted objects.

Another service, Swabbing, makes use of mobile derrick units to remove liquids from within the wellbore itself and allows reservoir pressure to push fluids up the tubing or casing for removal. Bonnetts Energy has the tools, the experience and the personnel to handle all aspects of oil and gas industry servicing.

“There are a lot of multinationals in this business so I wouldn’t say we’re one of the largest by any means. But once you take away the large groups, we’re certainly among the larger home grown providers of this type of service,” Tews explained.

“I think that the message we need to get across is that Bonnetts has been here a long time, it’s a long standing name and we’ll continue standing no matter what the government at the provincial or federal level throw at us in the coming months. We’re prepared to adapt to change, to be flexible within the changing oil and gas sector,” Toews stated.

CONFIDENCE IS KEY

That confidence in the strength and adaptability of the company is echoed by other key management team members.

“I agree with Murray,” says Tews. “We’ve been here a long time, we’re one of the larger players in the game, but we’re feeling the effects as much or more than everyone else. We don’t have the escape of being able to run to Venezuela if that’s where the business is thriving like the multi nationals can do.

“We’re a Western Canadian service provider which can be both a plus and a minus for us. We’ve done well compared to some of our competition in part due to our policy of reinvesting back into our equipment and our people to allow us to stay at the forefront of the industry. Our job is to look after our people, we strive to keep the head count right and to teach the people we have the best we can.”

Like many in Alberta and across Northern British Columbia the potential benefits of the development of a mature Liquefied Natural Gas (LNG) industry and its companion pipeline infrastructure are the brass ring they are reaching for to help propel the entire industry throughout the 21st Century. Not just firms directly involved in the oil and gas industry, but companies ranging from metal fabricators, to brush and right away clearing firms, to local retailers in communities throughout Western Canada who eagerly await the green light that will signal the start of this bright new chapter in Canada’s emergence as a global energy producer.

“Having a supply of gas in the ground is fine, but it benefits no one unless it can get to the end user. To do that you need to have infrastructure, pipelines and all of the support services. Putting those things in place takes time and money and the longer they are delayed the longer it will be before the product can move to the customer,” Toews said.

“Pipelines and infrastructure is what will hold up the LNG if they don’t get started on it soon. If things start to go again the lack of existing infrastructure will play a role with gas tied up behind the wellhead, but you need the infrastructure to get that gas to the end user and building it all will take years. We need British Columbia to get going on the LNG plants and get the pipe into the ground.”

READY FOR THE FUTURE

With decades of experience, a keen willingness to adapt and having an uncanny ability to read the signs indicating the direction its ever changing industry is taking, Bonnetts Energy Corp. considered itself ideally positioned to respond as positively in the future as it has since its founding more than 40 years ago.

“I think another take away for this story is that the way our business is run we’re sized properly to be able to adapt quickly. A smaller company might not have that option and a much larger company like a multinational is too rigid to be flexible,” Tews said.

“We have strong belief in and commitment to the safety side of our business as well as to our service delivery. We believe the service quality side of our business, coupled with the safety side of the business and the people we have in place puts us at the forefront of the industry as far as service delivery goes.”

Toews remains guardedly confident the industry and his company in particular will ultimately not merely survive, but thrive in the changing world of the Canadian oil and gas industry.

“There may be a crystal ball to show the future of the industry but it’s kind of murky right now. You can take the approach that if the light that shines through that crystal ball is the light at the end of the tunnel it would be kind of nice to see some of  that light right about now,” he said.

“At this time of year, with the ground starting to freeze the work that has to be done because the ground is frozen is about to get underway and we always get our share of that. We should start to see things pick up here soon.”

“The company has been very well managed through downturns in the economy, changes in government policy, the dollar, and oil prices, and we’ve always found a way to work through things. The current situation is as tough as we’ve had yet,” Toews says, referring to the hesitation and indecisiveness of Alberta’s NDP government.

“It’s keeping everybody in the weeds, in limbo, sitting and waiting, Right now, no decision is the worst decision. It’s a standard holding pattern.”

The enormous potential for growth in Canada’s oil and gas sector looms large. With the right decisions, thousands of new drills could start virtually overnight, Toews says.

“If we can get another 12,000 to 13,000 wells going in Western Canada, that would be great,” he says. “It’s tough to wait and see. We continue to be patient. We’ve pulled through every other problem we’ve faced so far, and we’ll get through this.”

www.bonnettsenergy.com