Thomas Alford - Precision Drilling Corp.

In this episode of the Canadian Equities podcast Thomas Alford, President-Well Servicing at Precision Drilling Corp.,  joins Robert Cooper as they discuss the energy industry. For the full length version of the Canadian Equities podcast connect with us at acumencapital.com/podcast.

Transcript

moderator 0:01

Welcome to Canadian Equities, a short biweekly podcast series, where we speak with top business leaders and hear their perspectives on the industries in which they operate for the full length version. Find our link in the podcast notes or connect with us at acumencapital.com I'm your host Robert Cooper today. I'm pleased to have with me, Tom Alford, president Wellservices at precision drilling, chairman of Tricom well service and director at Wajax thomas had a varied career in the Canadian oil. Including as a highly successful entrepreneur, CEO and sought after corporate director, we will talk about the energy business. Dom Alfred. Welcome.

Tom Alford 0:38

Thanks, uh, Robert, happy to be here and, uh, uh, look forward to talking to you,

moderator 0:44

Tom. Let's start at the beginning. Walk us through your resume if you will. And how did you get started in the energy?

Tom Alford 0:50

Uh, sure. Uh, grew up in, in red deer, uh, graduated from the university of Alberta with a commerce degree in 1980. And, um, my first job was with a small service company that was doing, uh, uh, bigger things in red deer, uh, immediately hooked on the business, the service business, exciting place to work with career potential, uh, that I hadn't seen in another place. And that was fact fast-tracked into positions of increased responsibility, uh, uh, very quickly in the, in the job. So left the first job at 27 years old, started my own, uh, well servicing company with the help of, some partners, uh, at one of the lowest points in the industry in 1985 interest rates at 13 and three quarters percent. And, uh, not very much activity. Uh, slowly built the company up, taking it public in 1992 through a shell, a company on the VSE graduated at the TSC in 96, and that's where the growth of our company and probably the industry as a whole. Uh, it began to surge, I think at the time that we did that there was only four or five, uh, publicly traded companies on the TSE in the early nineties, uh, including enzyme, precision, Mullen and NASCO. So it was a very early times in terms of public companies. And, uh, and we jumped in with both feet, went from 15 it's over 200 RIGS with a series of acquisitions over four or five years. And left, uh, left that company bonus resource services in 2000 obtain control of IROC energy services. Instead of plan in play for growth that took a couple of years to materialize. It was based on service rigs as a platform. It was very successful using organic growth model during a decade of increasing demand. I retired in 2013 with the sale of IROC uh, focused on board work to stay active and then joined precision in 2018 after competing with them for the better part of 30 years. And I remained active on both Trican Wells service board and a way Jack's his board.

moderator 2:51

So tell the energy business is in flux and there are a lot of competing cross winds. If you had to narrow it down to one or two. Main themes that you see playing out in teams that you expect will endure over the medium term, what would they be?

Tom Alford 3:06

Well, I see, I see the, a huge ongoing opportunity in the oil and gas industry. We've been down for so long and, and all those things have contributed to, uh, I think the opportunity in front of us, uh, More evidence of, of the fundamentals improving are emerging daily, through increased demand coming out of the COVID, situation. There's a tightened supply for lack of investment, for a number of, years and our products are critical to both our way of life. And increasingly important to a developing world is countries provide necessities of life and, and, and an increasing population. So I have full faith in the recovery of our business, especially in Canada, despite what might appear to be monumental obstacles in our way, many monumental obstacles in our way. My assumption is that as demand increases, uh, services can respond. But I think the ability to respond is significantly overestimated and that's going to be, uh, the opportunity that is in front of us as we go forward based on deteriorating situation over the past eight years, we're now in a situation where, uh, there's less equipment available. Uh, many, many people have left the industry and, uh, it's time to go forward again in a tightened environment. And I think that's an option.

moderator 4:23

So you've seen boom and Boston. You've probably seen two or three of them each in your career. So what's been the biggest change that you've seen since you started?

Tom Alford 4:31

I think that, uh, reminds me of a comment. One of the younger fellows made to me, I think it was in the early two thousands, uh, when we had a little short term blip in, uh, inactivity and, and they said, well, you must have gone through a boom or a bust or a bus before in the industry. And I said, the first 12 years of my. Of my career was a, was a bust in terms of the activity that we faced. They started in 1980 in April and national energy policy came in, in, uh, in the fall of that year. And it just never really recovered until gas started to take hold in, 1992, I think it was so, uh, yeah, that, uh, it certainly is that way, but, uh, there's no question that the largest change is comes down to one thing and that's technology. The past 42 years that I've been in the business, uh, phenomenal changes relating directly and indirectly to technology. So, you know, directly in the techniques that are used to extract oil and gas. Now we've got sake. D we've got horizontal drilling, vastly improved fracturing techniques, drilling automation, downhole technology, carbon capture all mind boggling. When, when you think about where you began, and if you just fast forwarded, you would just be. Uh, secondly, the adaptation of technology to enhance the efficiency and drive productivity. You know, a simple thing that we take for granted today, cell phones, back when we started in the business. we could contact our crews, uh, only occasionally, through an XJ phone system. It was, which was relayed by an operator, pinging a tower, where you thought someone might be at that point in time, then they had to be there in order for you to make a connection. Today, any issue with the rigs, no matter, where it is around the world can be disseminated across the company. In real time, the industry's embraced technology. It's effectively been the savior in Western Canada for the business and we'll continue to do so going forward. I think, you know, if you take still shots, it really doesn't do us justice, but, the movie is pretty amazing when you look, over the past 40 years.

moderator 6:32

So esg has been a big trend across all the investing business in particular, the energy and extraction business. The Canadian energy industry in general has a very good track record in absolute terms. And certainly relative to other locales returns probably help a lot. But other than that, how does the industry change to view. Canadian energy is somehow uninvestible due to esgconcerns.

Tom Alford 6:56

Well, it's certainly a front and center topic, as you indicate, working inside the businesses, I've had, a viewpoint to see the good things that we do and the progress that we make. And I think the progress is accelerating. Do I believe we've done a good job of relating the message in the past? I don't think we have, and I think that, ESG, will give us a. A platform to be able to deliver that message in a better way. So I, I view the ESG, uh, evolution is a good thing for our industry. Despite the outside perceptions that are there, the service portion of it. of the businesses and important cog in the wheel of industry esg. And I think that will come to light, very quickly as, as these reports become more commonplace, the E is currently being measured. Just about everybody in the industry is involved or participating. I'm confident the energy sector will grade out very well at the end of the day. Certainly more opportunity to improve, but awareness and execution have never been higher on that front. The S is natural and totally untold. we work across Western Canada and affect the social fabric of nearly every community in terms of direct employment and social support, even on a wider basis to other parts of.canadaYou know, the indigenous relationships, are beginning to flourish in many, many areas. I think they will continue to develop across the nation as time goes on. My association with the GS is basically a given, in the ESG portion in that the service side and the public sector in general, governance is, paramount to, to their existence. So again, not well told by the industry, but far beyond, what's perceived by the rest of the world. I see the evolution of ESG as a huge opportunity, again, for us to outline the reality of how good we are currently and where we intend to. Reality will prevail in time. And I think that the callus and sometimes planned comments regarding our industry, will disappear in, in relatively short order.

moderator 8:57

Thom Alford. Thanks for joining us today on our podcast. Thanks

Tom Alford 9:02

Robert. Happy to be here.

moderator 9:06

Note that this podcast is not making an investment recommendation on any companies discussed. We welcome your comments on today's episode or any other episode. Connect with us at Acumen Capital dot com.