Find out how Chinook Consulting tapped into more sales by diversifying overseas, and managed the risks and cash flow through credit insurance.

New Markets Put Wind in the Sales for Chinook Consulting

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As companies in Canada’s Oil & Gas sector look to overseas markets for renewed growth, the challenges of ensuring cash flow and managing risks of non-payment emerge. This article explores how one company, Chinook Consulting, diversified into new markets and used credit insurance to overcome the challenges.

Below, you’ll learn:

  1. How diversifying into new markets fuels growth
  2. The risks Chinook Consulting faced in overseas markets
  3. How credit insurance helped the company pay employees and suppliers even before getting its receivables

New Markets Put Wind in the Sales for Chinook Consulting

Chinook Consulting Services had the wind at its back when it first opened its doors in 2002. The gas industry was booming in Western Canada, and demand was brisk for the Calgary-based company’s geological services.

“It was a good time to start a company, and there were plenty of opportunities in Alberta and British Columbia,” says Marius Simon, Vice-President of Operations and Business Development, Chinook Consulting. “We started out with about ten people and grew at a steady, controlled pace to more than 100 employees within the first ten years. Today, we’re at about 150.”

That growth was fueled by Chinook’s determination to be reliable, dependable, and innovative for its customers. In layman’s terms, Chinook provides a wide range of services, analysis, tools and technologies to help its customers discover and execute new oil and gas deposits. It has also continued to diversify its offerings beyond geology and geological operations services, from operations geology and oil sands coring supervision to petrographic analyses, and prides itself on catering to each customer’s specific needs, including recruiting for qualified personnel overseas.

“Being relevant to the Oil & Gas sector means focusing on both the quality of our services and the quality of the people,” says Marius. “Our people is what gives us our competitive edge.”

With this recognition, Chinook’s goal is not only to provide the best wellsite geology services, but also to protect the health and safety of all field staff. Even as their operations have expanded beyond Canada, they have had no on the job injuries to date.

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Diversifying into new markets helps fuel growth

While Chinook continued to find new opportunities in the domestic market, including new projects in Eastern Canada, the company soon realized that further growth would have to come from new markets.

“The Oil & Gas sector was slowing in Canada at that time,” Marius explains. When an opportunity came up for Chinook to piggyback with a large Canadian company to do work on wildcat wells in the Aquitaine Basin in France and an onshore exploratory program in Qatar, Chinook jumped on it.

“After that, we started to pursue different overseas opportunities, mostly for Canadian E&P (exploration and production) companies who had local operations around the world,” says Marius. “We expanded more and more internationally to Algeria, Brunei, Australia, Ukraine, Albania, Romania, and Suriname and into the U.S., as well.”

Today, fully 40 per cent of Chinook’s business comes from markets outside of Canada.

Drilling down into the new risks

With the new markets, however, came new risks and challenges. One of the most concerning for Chinook was the levels of safety standards in some countries.

“If we were piggybacking with a large Canadian company the safety standards were maintained,” Marius explains. “But in other cases we had be very diligent to protect the health and wellbeing of our employees.

Chinook was prepared to take the necessary steps to ensure its health and safety standards were maintained because it had incorporated health, safety and environmental (HSE) excellence as a core company value. It had developed an HSE Policy Manual and an HSE Management System that clearly spelled out the required responsibilities, control features and compliance.

“Regardless of local standards, our HSE employee health and safety cannot be compromised,” Marius confirms.

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Credit insurance makes managing non-payment a breeze

Chinook recognized immediately that another risk of dealing internationally was being paid on time—or at all. “We realized from the very beginning that ensuring payment would be an ongoing risk,” says Marius. “We actually knew other companies that went bankrupt because they didn’t get paid, so we used EDC’s credit insurance to mitigate that.”

And ensured payment wasn’t the only benefit of credit insurance. “Using credit insurance also gives us access to more money through our line of credit,” says Marius. “There is no risk for the bank, so it’s easy to get more financing and cash flow This, in turn, ensures that our providers and contractors are paid in a timely fashion, regardless of when our receivables are paid.”
 
Having this cash flow helped Chinook take on new contracts, as Marius explains. “In Algeria, for example, it’s pretty common for customers to take six to eight months to pay their invoices. Obviously, we couldn’t sustain that, because we pay our employees and sub-contractors every month. But with EDC’s credit insurance, we’re able to free up our cash flow, making it possible to take contracts in the market.”

Continuing to grow with the flow

Now with 150 employees and subcontractors, Chinook is actively looking to expand into new markets, including Libya, Iran, Oman, and Eastern Europe.
“We’ve grown from a start-up company to being a preferred contractor on a very wide range of high profile projects,” says Marius. “Diversifying into new markets helped us to achieve that.”

New Markets Put Wind in the Sales for Chinook Consulting was last modified: August 1st, 2018 by Export Development Canada.