Civeo closes two lodges north of Fort McMurray By Vincent McDermott Thursday, January 1, 2015 8:08:14 MST PM A worker walks through a vehicle bay at a Suncor Energy site north of Fort McMurray. Suncor is one of several oil companies relying on Civeo. Vincent McDermott/Today Staff A worker walks through a vehicle bay at a Suncor Energy site north of Fort McMurray. Suncor is one of several oil companies relying on Civeo. Vincent McDermott/Today Staff Bookmark and Share Change text size for the story Print Report an error A major American camp provider is closing two lodges near Fort McMurray and has laid off one-third of its Canadian staff, citing falling oil prices and cancelled oilsands projects as justification. Texas-based Civeo Corp. announced in a statement Monday that they were permanently closing its Lakeside Lodge, a camp 50 kilometres north of Fort McMurray near Fort McKay. It had approximately 500 rooms. Civeo is also temporarily closing its Athabasca Lodge, which had 2,005 rooms and located in the same area. A timeline for its reopening has not yet been announced. Athabasca Lodge also had a Tim Hortons, one of a handful of Wood Buffalo locations not in Fort McMurray. Approximately 30% of their Canadian workforce were being laid off, but did not say how many that would total. “As it became evident during the fourth quarter that capital spending budgets among the major oil companies were going to be cut, we began taking steps to reduce marketed room capacity, control costs and curtail discretionary capital expenditures,” said Bradley Dodson, Civeo’s CEO. We are limiting our discretionary capital spending in 2015 to those projects that are supported by customer contracts, he said. From a revenue perspective, we are reassessing where in our regional markets we can profitably improve occupancy. On Tuesday, a spokesperson was asked by the Today which oilsands projects would be affected by the closure, the total number of Canadian staff laid off and how many were staying at the lodges when the closures were announced. As of Thursday night, calls had not been returned. The company currently provides camp services for major energy companies in the oilsands, including Imperial Oil’s Kearl Lake project and Suncor Energy’s Fort Hills project. With the closure of Lakeside and Athabasca, Civeo now runs 10 lodges in the oilsands, as well as five scattered across resource-rich areas of Manitoba, Saskatchewan, British Columbia. It also operates a small, 75-room house in Yukon Territory. Civeo’s decision comes after a year of declining oil prices and cancelled projects. Norway’s Statoil shelved their Corner oilsands project earlier this year, prompting Pembina Pipeline Corp. to cancel a pipeline that would have supported the project. Total E&P Canada suspended work on it’s $11 billion Joslyn project, blaming rising industry costs. Cenovus Energy has slowed expansion at several locations, while CNRL announced they were prepared to cut $2 billion from its 2015 budget. Civeo’s operating costs for 2015 are expected to decrease by more than 35% in Canada. A statement says Civeo has approximatly 35% to 40% of Canadian lodge rooms contracted, down from 75% at the beginning of 2014. Canadian occupancy is expected to hover between 44% to 47%. “In reaction to softer markets, the company is pursuing additional revenue opportunities, adjusting its cost structure, limiting capital expenditures and suspending its quarterly dividend,” the statement read. “Management will continue to focus on operating costs as clarity on market conditions improves.”
Posted on: Sun, 04 Jan 2015 04:00:15 +0000
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