Hybrid Wireless puts its money on Alberta’s next big bet
It’s a precarious time to be a supplier to oil and gas companies. But Hybrid Wireless’ dual-income model and private fibre optic and microwave networks may help it weather the storm and come out stronger on the other side
by Elizabeth Hames
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Photo Bluefish Studios/Hand Lettering Jenn Madole
Head office: Airdrie
CEO: Ryan Onushko
2015 Revenue: $3.8 million
In the years preceding the oil price plunge, with oil at or above $100 per barrel, energy companies couldn’t build new sites fast enough. And each of those sites needed Wi-Fi to stream real-time operations data back to head office, monitor remote locations via video link and entertain workers. For years, that high demand for Wi-Fi spurred Hybrid Wireless’ growth. The telecommunications company specializes in building the infrastructure necessary to bring remote sites online, be it a fibre optic network, microwave tower or an off-grid power generation station.
“In many cases they’re on top of mountain tops, they’ve got no power, they’ve got very poor infrastructure for roads,” says Ryan Onushko, the company’s founder and CEO. “We’re flying stuff via helicopter in some cases. Or sometimes they’re only accessible in the winter when everything is frozen.”
The Wi-Fi has to be reliable – a downed Internet connection can mean losses in the hundreds of thousands of dollars per day – and it has to be fast. Onushko says Hybrid has developed a reputation for its reliable connections, and it can get a site set up with wireless Internet in a fraction of the time it takes a larger company. After all, bigger ships are slower to turn.
Word of Hybrid’s speed and reliability spread throughout the industry, leading to more contracts with larger clients. Hybrid could bring in hundreds of thousands, or in some cases millions, of dollars in revenue from a single job. And, by 2014, Hybrid had secured major contracts with Husky Energy and Bellatrix Exploration, which helped bump its revenue 111 per cent that year from $1.8 million to $3.8 million. Those two contracts alone made up 44 per cent of Hybrid’s revenue.
But all good things must come to an end. With forecasters continually downgrading their crude-price projections, producers large and small are reducing capital expenditures and delaying new projects. Even planned developments aren’t safe. In October, Royal Dutch Shell surprised industry watchers when it announced it would back out of its planned, multibillion-dollar Carmon Creek oil sands development. “Everything’s kind of scary out there now,” Onushko says.
However, Onushko, who comes from a long line of entrepreneurs, expected a downturn to come along sooner or later. “It can’t all be sugar plums and roses forever,” he says. That’s why, in 2013, Hybrid acquired a private network of nearly 1,000 kilometres of fibre optic cables and about 80 microwave towers. With its own infrastructure, Hybrid no longer has to lease bandwidth from third-party telecommunications companies, which reduces costs. And Onushko says clients like Hybrid’s ability to send data from a drill site back to head office via a private network.
“We’re a small business in the grand scheme of things, but we’re competing with the likes of Telus and the big guys with our own infrastructure,” Onushko says.
Moreover, Hybrid has taken a two-pronged approach to telecommunications. Yes, contracts to build bring in a lot of money. But the revenue Hybrid can generate from a contract doesn’t stop when the construction does. Hybrid bills its clients monthly to operate the Wi-Fi, monitoring and data transmission services. “Once we gain them as a client, they’re traditionally on our network for a long time,” Onushko says. “We worked hard to establish that recurring revenue.”
Onushko expects Hybrid to lean more on operations for revenue, but only until the storm blows over. And he says Hybrid is well-positioned for when it does. It’s still actively pursuing build contracts, and, with its far-reaching network, it’s ready to jump on any new projects that come online – something Onushko says is still happening, just not as frequently as in boom times.’
“The oil and gas companies are still spending money, they’re just spending less of it,” he says. “The smarter ones are the ones that are deploying these solutions in a downturn because they’re getting it for less money.
They’re not paying a premium because labour rates are lower now.”
However, you won’t find Hybrid pounding the pavement to find opportunities in the Athabasca oil sands. “It’s exactly for the reasons that have just happened,” Onushko says. “When it dries up, it shuts down completely.”
Instead, Hybrid is putting money on Alberta’s next big bet: the oil and gas fields of the Duvernay and Montney plays in the northwest corner of the province and into B.C. Energy companies have flocked to those areas in the past few years after new fracking technology made it possible to access oil and gas that was once believed to be inaccessible. Activity and investment in the region is expected to ramp up over the next few years as these companies move from upstream to midstream operations. Hybrid Wireless wants to make sure it’s there when that happens, so it has applications in to build new microwave towers in Fox Creek, Whitecourt and Valleyview. It’s also built infrastructure out in the Grande Prairie region. “We’re seeing that trend and we’re capitalizing on it,” Onushko says.