Dalmac Energy, a trucking company serving Canada’s struggling oilpatch, has shut down as a creditor-imposed bankruptcy looms.
Alberta-based Dalmac ceased operations abruptly on Jan. 27 as a court-appointed receiver assumed control over the firm, CEO John Babic told FreightWaves. Dalmac had about 60 power units, down from about 200, and around 80 employees, mostly drivers.
“What happened is very unfortunate,” Babic said ahead of a hearing that likely will place the company in bankruptcy proceedings.
In business for 55 years, Dalmac specialized in moving “hot oiler” units used for oil well operations in cold climates. A drop in oil services spending in the fourth quarter hit Dalmac’s bottom line, adding to a long-term downturn in Canada’s oilpatch.
In January, the company’s main creditor Servus Credit Union moved to cut off Dalmac and collect nearly C$7 million in outstanding debt, court records show.
The closure of an operating account and mounting debt made it impossible to make payroll, Babic said.
Dalmac had been scaling down its business in response to both the long-term slowdown in Canada’s oil patch as well as a dropoff in spending in the sector during the fourth quarter ahead of October’s federal election.
The company had begun seeing an uptick in business when the shutdown happened, Babic said.
Companies operating in western Canada’s once-booming oil patch have struggled in a perfect storm of lower oil prices, increased output in the U.S. and uncertainties and delays with pipelines.
“This is a larger, sad story,” he said. “But I would have planned more carefully in hindsight.”
Mullen Group, one of Canada’s largest transportation companies, made a multi-year pivot from oil services to trucking and logistics in response to the waning fortunes of the sector.
Babic said a transition to more traditional freight would have been challenging considering the very specialized nature of oil service.
Babic said he did not agree with a court-imposed receivership and forthcoming bankruptcy triggered by Servus. But he is cooperating with the asset liquidation, ostensibly the sale of tractors, specialty tankers and other equipment.
“It’s too hard to fight, so I decided to roll with it,” Babic said.