Ensign Energy Services Inc. Reports 2024 Second Quarter Results
FINANCIAL HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per common share data)
|
Three months ended |
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Six months ended |
||||||||
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
|
Revenue |
$ 391,792 |
|
$ 432,770 |
|
(9) |
|
$ 823,099 |
|
$ 916,822 |
|
(10) |
Adjusted EBITDA 1 |
100,222 |
|
116,616 |
|
(14) |
|
217,678 |
|
243,940 |
|
(11) |
Adjusted EBITDA per common share 1 |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
(16) |
|
|
|
|
|
(11) |
Diluted |
|
|
|
|
(14) |
|
|
|
|
|
(11) |
Net (loss) income attributable to common |
(4,538) |
|
10,302 |
|
nm |
|
(5,755) |
|
14,543 |
|
nm |
Net (loss) income attributable to common |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
nm |
|
|
|
|
|
nm |
Diluted |
|
|
|
|
nm |
|
|
|
|
|
nm |
Cash provided by operating activities |
126,402 |
|
166,771 |
|
(24) |
|
220,280 |
|
271,345 |
|
(19) |
Funds flow from operations |
98,250 |
|
116,764 |
|
(16) |
|
206,688 |
|
235,055 |
|
(12) |
Funds flow from operations per common |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
(17) |
|
|
|
|
|
(13) |
Diluted |
|
|
|
|
(16) |
|
|
|
|
|
(12) |
Total debt, net of cash |
1,119,127 |
|
1,277,197 |
|
(12) |
|
1,119,127 |
|
1,277,197 |
|
(12) |
Weighted average common shares - basic |
183,894 |
|
183,944 |
|
— |
|
183,941 |
|
183,931 |
|
— |
Weighted average common shares - diluted |
184,745 |
|
185,031 |
|
— |
|
184,766 |
|
185,388 |
|
— |
nm - calculation not meaningful |
1 Please refer to Adjusted EBITDA calculation in Non-GAAP Measures. |
- Revenue for the second quarter of 2024 was
$391.8 million , a nine percent decrease from the second quarter of 2023 revenue of$432.8 million . - Revenue by geographic area:
Canada -$93.4 million , 24 percent of total;United States -$208.6 million , 53 percent of total; and- International -
$89.8 million , 23 percent of total.
- Adjusted EBITDA for the second quarter of 2024 was
$100.2 million , a 14 percent decrease from Adjusted EBITDA of$116.6 million for the second quarter of 2023. - Funds flow from operations for the second quarter of 2024 decreased 16 percent to
$98.3 million from$116.8 million in the second quarter of the prior year. - Net loss attributable to common shareholders for the second quarter of 2024 was
$4.5 million , down from net income attributed to common shareholders of$10.3 million for the second quarter of 2023. - During the second quarter of 2024,
$78.9 million of debt was repaid and a total of$90.3 million was repaid during the first half of 2024. FromJanuary 1, 2023 toJune 30, 2024 , a total of$307.9 million of debt has been repaid leaving$292.1 million of the$600.0 million debt reduction target expected to be achieved by the end of 2025. - Interest expense decreased by 19 percent to
$25.5 million from$31.6 million . The decrease is the result of lower debt levels and reduced effective interest rates.
OPERATING HIGHLIGHTS
(Unaudited)
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Three months ended |
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Six months ended |
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2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
|
Drilling |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Number of marketed rigs |
|
|
|
|
|
|
|
|
|
|
|
|
94 |
|
115 |
|
(18) |
|
94 |
|
115 |
|
(18) |
|
77 |
|
85 |
|
(9) |
|
77 |
|
85 |
|
(9) |
International 2 |
31 |
|
32 |
|
(3) |
|
31 |
|
32 |
|
(3) |
Total |
202 |
|
232 |
|
(13) |
|
202 |
|
232 |
|
(13) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating days 3 |
|
|
|
|
|
|
|
|
|
|
|
|
2,451 |
|
2,131 |
|
15 |
|
6,203 |
|
5,931 |
|
5 |
|
2,912 |
|
4,302 |
|
(32) |
|
6,046 |
|
8,919 |
|
(32) |
International 2 |
1,255 |
|
1,247 |
|
1 |
|
2,574 |
|
2,351 |
|
9 |
Total |
6,618 |
|
7,680 |
|
(14) |
|
14,823 |
|
17,201 |
|
(14) |
Well Servicing |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Number of rigs |
|
|
|
|
|
|
|
|
|
|
|
|
45 |
|
47 |
|
(4) |
|
45 |
|
47 |
|
(4) |
|
47 |
|
47 |
|
— |
|
47 |
|
47 |
|
— |
Total |
92 |
|
94 |
|
(2) |
|
92 |
|
94 |
|
(2) |
Operating hours |
|
|
|
|
|
|
|
|
|
|
|
|
12,027 |
|
11,804 |
|
2 |
|
23,953 |
|
25,580 |
|
(6) |
|
35,312 |
|
30,647 |
|
15 |
|
61,563 |
|
58,564 |
|
5 |
Total |
47,339 |
|
42,451 |
|
12 |
|
85,516 |
|
84,144 |
|
2 |
1 Excludes coring rigs. |
2 Includes workover rigs. |
3 Defined as contract drilling days, between spud to rig release. |
- Canadian drilling recorded 2,451 operating days in the second quarter of 2024, a 15 percent increase from 2,131 operating days in the second quarter of 2023. Canadian well servicing recorded 12,027 operating hours in the second quarter of 2024, a two percent increase from 11,804 operating hours in the second quarter of 2023.
-
United States drilling recorded 2,912 operating days in the second quarter of 2024, a 32 percent decrease from 4,302 operating days in the second quarter of 2023.United States well servicing recorded 35,312 operating hours in the second quarter of 2024, a 15 percent increase from 30,647 operating hours in the second quarter of 2023. - International drilling recorded 1,255 operating days in the second quarter of 2024, a one percent increase from 1,247 operating days recorded in the second quarter of 2023.
FINANCIAL POSITION HIGHLIGHTS
As at ($ thousands) |
|
|
|
|
|
Working capital (deficit) 1, 2 |
(11,514) |
|
15,780 |
|
(1,188,071) |
Cash |
25,226 |
|
20,501 |
|
44,071 |
Total debt, net of cash |
1,119,127 |
|
1,189,848 |
|
1,277,197 |
Total assets |
2,916,191 |
|
2,947,986 |
|
3,030,460 |
Total debt to total debt plus equity ratio |
0.46 |
|
0.48 |
|
0.51 |
1 See non-GAAP Measures section. |
2
Change in working capital (deficit) from |
- Total debt, net of cash, was reduced by
$70.7 million sinceDecember 31, 2023 . - Our debt reduction for 2024 is targeted to be approximately
$200.0 million . Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately$600.0 million . If industry conditions change, this target could be increased or decreased.
CAPITAL EXPENDITURE HIGHLIGHTS
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Three months ended |
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Six months ended |
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($ thousands) |
2024 |
|
|
2023 |
|
|
% change |
|
|
|
2024 |
|
|
2023 |
|
|
% change |
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upgrade/growth |
2,368 |
|
|
3,772 |
|
|
(37) |
|
|
|
4,138 |
|
|
12,028 |
|
|
(66) |
Maintenance |
46,058 |
|
|
52,673 |
|
|
(13) |
|
|
|
99,057 |
|
|
94,296 |
|
|
5 |
Proceeds from disposals of property and |
(8,116) |
|
|
(3,299) |
|
|
nm |
|
|
|
(11,387) |
|
|
(3,454) |
|
|
nm |
Net capital expenditures |
40,310 |
|
|
53,146 |
|
|
(24) |
|
|
|
91,808 |
|
|
102,870 |
|
|
(11) |
nm - calculation not meaningful |
- Net purchases of property and equipment for the second quarter of 2024 totaled
$40.3 million , consisting of$2.4 million in upgrade capital and$46.1 million in maintenance capital, offset by disposition proceeds of$8.1 million . Gross capital expenditures for 2024 are targeted to be approximately$147.0 million , primarily related to maintenance expenditures and selective growth projects. In addition, the Company may consider other upgrade or growth projects in response to customer demand and appropriate contract terms.
This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA, Adjusted EBITDA per common share and working capital. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measures from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.
OVERVIEW
Revenue for the second quarter of 2024 was
Adjusted EBITDA totaled
Net loss attributable to common shareholders for the second quarter of 2024 was
Funds flow from operations decreased 16 percent to
The outlook for oilfield services continues to be generally constructive despite the year-over-year decline in oilfield services activity in certain operating regions. The recent completion of the Trans Mountain Pipeline expansion has resulted in increased Canadian industry activity, while the US rig count continues to be depressed in part because of natural gas commodity prices. Furthermore, there have been several recent oil and natural gas customer mergers and acquisitions ("M&A") in both the Canadian and the US markets that have impacted drilling programs over the short-term, with customers exercising discipline with their capital programs. However, despite these short-term headwinds, demand for crude oil continues to improve year-over-year. Moreover, OPEC+ nations continue to exercise production and supply discipline in response to market conditions.
Over the near term, geopolitical tensions, hostilities in areas of the
The Company's operating days declined in the three and six months ended
The average
The Company's working capital as at
The Company's available liquidity, consisting of cash and available borrowings under its
REVENUE AND OILFIELD SERVICES EXPENSE
|
Three months ended |
|
Six months ended |
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($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
93,375 |
|
80,618 |
|
16 |
|
231,853 |
|
220,734 |
|
5 |
|
208,578 |
|
276,781 |
|
(25) |
|
417,013 |
|
551,334 |
|
(24) |
International |
89,839 |
|
75,371 |
|
19 |
|
174,233 |
|
144,754 |
|
20 |
Total revenue |
391,792 |
|
432,770 |
|
(9) |
|
823,099 |
|
916,822 |
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
Oilfield services expense |
276,075 |
|
301,503 |
|
(8) |
|
574,865 |
|
643,702 |
|
(11) |
Revenue for the three months ended
The decrease in total revenue during the first half of 2024 was primarily due to recent M&A activity in the oil and natural gas sector in
CANADIAN OILFIELD SERVICES
Revenue increased 16 percent to
Canadian revenue accounted for 24 percent of the Company's total revenue in the second quarter of 2024 (2023 - 19 percent) and 28 percent (2023 - 24 percent) for the first half of 2024.
The Company's Canadian drilling operations recorded 2,451 operating days in the second quarter of 2024, compared to 2,131 operating days for the second quarter of 2023, an increase of 15 percent. For the six months ended
The financial results for the Company's Canadian operations for the second quarter of 2024 improved along with operating activity, largely as a result of the recent completion of the Trans Mountain Pipeline expansion.
During the first half of 2024, the Company transferred 23 under-utilized Canadian drilling rigs into its operations reserve fleet.
The Company's
The Company's
Drilling rig operating days decreased by 32 percent to 2,912 operating days in the second quarter of 2024 from 4,302 operating days in the second quarter of 2023 and decreased by 32 percent to 6,046 operating days in the first half of 2024 from 8,919 operating days in the first half of 2023.
Operating and financial results for the Company's
During the first half of 2024, the Company transferred six under-utilized
INTERNATIONAL OILFIELD SERVICES
The Company's international operations recorded revenue of
The Company's international operations contributed 23 percent of the total revenue in the second quarter of 2024 (2023 - 17 percent) and 21 percent of the Company's revenue in the first six months of 2024 (2023 - 16 percent).
International operating days for the three months ended
Operating and financial results from international operations reflect positive industry conditions that supported increased drilling activity and rig revenue rates. In addition, operational activity increased year-over-year as a result of a third Company drilling rig in
During the first half of 2024, the Company transferred one under-utilized international drilling rig into its reserve fleet.
DEPRECIATION
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Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Depreciation |
82,512 |
|
74,835 |
|
10 |
|
170,765 |
|
152,690 |
|
12 |
Depreciation expense totaled
GENERAL AND ADMINISTRATIVE
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
General and administrative |
15,495 |
|
14,651 |
|
6 |
|
30,556 |
|
29,180 |
|
5 |
% of revenue |
4.0 |
|
3.4 |
|
|
|
3.7 |
|
3.2 |
|
|
General and administrative expense increased six percent to
FOREIGN EXCHANGE AND OTHER (GAIN) LOSS
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Foreign exchange and other (gain) loss |
(220) |
|
747 |
|
nm |
|
4,664 |
|
5,773 |
|
(19) |
nm - calculation not meaningful |
Included in this amount is the impact of foreign currency fluctuations in the Company's subsidiaries that have functional currencies other than the Canadian dollar.
INTEREST EXPENSE
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Interest expense |
25,538 |
|
31,560 |
|
(19) |
|
52,018 |
|
65,958 |
|
(21) |
Interest expense was incurred on the Company's Credit and Term Facilities, capital lease and other obligations.
Interest expense decreased by 21 percent for the first half of 2024 compared to the first half of 2023, as a result of lower debt levels and effective interest rates.
INCOME TAXES (RECOVERY)
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Current income taxes |
328 |
|
767 |
|
(57) |
|
1,482 |
|
1,168 |
|
27 |
Deferred taxes income (recovery) |
658 |
|
4,496 |
|
(85) |
|
(4,113) |
|
5,856 |
|
nm |
Total income taxes (recovery) |
986 |
|
5,263 |
|
(81) |
|
(2,631) |
|
7,024 |
|
nm |
nm - calculation not meaningful |
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per common share data) |
Three months ended |
|
Six months ended |
||||||||
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
|
Cash provided by operating activities |
126,402 |
|
166,771 |
|
(24) |
|
220,280 |
|
271,345 |
|
(19) |
Funds flow from operations |
98,250 |
|
116,764 |
|
(16) |
|
206,688 |
|
235,055 |
|
(12) |
Funds flow from operations per common |
|
|
|
|
(17) |
|
|
|
|
|
(13) |
Working capital (deficit) 1 |
(11,514) |
|
15,780 |
|
nm |
|
(11,514) |
|
15,780 |
|
nm |
nm - calculation not meaningful |
1
Comparative figure as at |
During the three months ended
At
The Company's existing bank facility provides for total borrowings of
INVESTING ACTIVITIES
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Purchase of property and equipment |
(48,426) |
|
(56,445) |
|
(14) |
|
(103,195) |
|
(106,324) |
|
(3) |
Proceeds from disposals of property and |
8,116 |
|
3,299 |
|
nm |
|
11,387 |
|
3,454 |
|
nm |
Net change in non-cash working capital |
6,529 |
|
(3,769) |
|
nm |
|
24,325 |
|
3,769 |
|
nm |
Cash used in investing activities |
(33,781) |
|
(56,915) |
|
(41) |
|
(67,483) |
|
(99,101) |
|
(32) |
nm - calculation not meaningful |
Net purchases of property and equipment for the second quarter of 2024 totaled
FINANCING ACTIVITIES
|
Three months ended |
|
Six months ended |
||||||||
($ thousands) |
2024 |
|
2023 |
|
% change |
|
2024 |
|
2023 |
|
% change |
Proceeds from long-term debt |
13,240 |
|
28,285 |
|
(53) |
|
56,714 |
|
36,547 |
|
55 |
Repayments of long-term debt |
(92,126) |
|
(93,824) |
|
(2) |
|
(147,024) |
|
(137,729) |
|
7 |
Lease obligation principal repayments |
(2,505) |
|
(1,443) |
|
74 |
|
(4,792) |
|
(10,387) |
|
(54) |
Interest paid |
(25,055) |
|
(41,653) |
|
(40) |
|
(52,558) |
|
(64,422) |
|
(18) |
Issuance of common shares under share |
148 |
|
— |
|
— |
|
196 |
|
— |
|
nm |
Purchase of common shares held in trust |
(450) |
|
(412) |
|
9 |
|
(1,032) |
|
(947) |
|
9 |
Cash used in financing activities |
(106,748) |
|
(109,047) |
|
(2) |
|
(148,496) |
|
(176,938) |
|
(16) |
nm - calculation not meaningful |
On
The Term Facility requires repayments of at least
The amended and restated Credit Facility provides the Company with continued access to revolver capacity in a dynamic industry environment.
On
As at
The current capital structure of the Company consisting of the Credit Facility and the Term Facility, allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.
Covenants
The following is a list of the Company's currently applicable covenants pursuant to the Credit Facility and the associated calculations as at
|
Covenant |
|
|
|
The Credit Facility |
|
|
|
|
Consolidated Net Debt to Consolidated EBITDA 1 |
≤ 4.00 |
|
|
2.45 |
Consolidated EBITDA to Consolidated Interest Expense1,2 |
≥ 2.50 |
|
|
4.20 |
Consolidated Net Senior Debt to Consolidated EBITDA1,3 |
≤ 2.50 |
|
|
2.42 |
1 Consolidated Net Debt is defined as consolidated total debt, less cash and cash equivalent. Consolidated EBITDA, as defined in the Company's Credit Facility agreement, is used in determining the Company's compliance with its covenants. The Consolidated EBITDA is substantially similar to Adjusted EBITDA. |
2 Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis. |
3 Consolidated Net Senior Debt is defined as Consolidated Total Debt minus subordinated debt, cash and cash equivalent. |
As at
The Credit Facility
The amended and restated credit agreement, a copy of which is available on SEDAR+, provides the Company with its Credit Facility and includes requirements that the Company comply with certain covenants including a Consolidated Net Debt to Consolidated EBITDA ratio, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Net Senior Debt to Consolidated EBITDA ratio
OUTLOOK
Industry Overview
The global outlook for oilfield services continues to be generally constructive and supports relatively steady demand for services. Global demand for crude oil continues to grow year-over-year and OPEC+ nations continue to moderate supply over the near-term, balancing crude oil supply and demand fundamentals. However, economic conditions, geopolitical tensions, hostilities in areas of the
Over the short-term, depressed natural gas prices and recent customer M&A activity in the Company's
The Company remains committed to disciplined capital allocation and debt repayment. The Company has targeted approximately
The Company has budgeted gross capital expenditures for 2024 of approximately
Canadian Activity
Canadian activity, representing 28 percent of total revenue in the first half of 2024, decreased in the second quarter of 2024 as a result of seasonal spring break-up. Activity in
As of
United States Activity
As of
International Activity
International activity, representing 21 percent of total revenue in the first half of 2024, declined modestly in the second quarter of 2024 due to a one rig decline in
Activity in the Company's
Activity in
Operations in
As of
RISK AND UNCERTAINTIES
The Company is subject to numerous risks and uncertainties. A summary discussion of certain risks faced by the Company may be found hereinbelow and a fulsome discussion is included under the "Risk Factors" section of the Company's Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company's Management's Discussion & Analysis ("MD&A") for the year ended
Other than as described within this document, the Company's risk factors and management of those risks have not changed substantially from those as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company's future business operations or financial condition. If any such potential events, whether described in the risk factors in this document or the Company's AIF or otherwise actually occur, or described events intensify, overall business, operating results and the financial condition of the Company could be materially adversely affected.
CONFERENCE CALL
A conference call will be held to discuss the Company's second quarter 2024 results at
Consolidated Statements of Financial Position
As at |
|
|
|
|
(Unaudited - in thousands of Canadian dollars) |
|
|
|
|
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash |
|
$ 25,226 |
|
$ 20,501 |
Accounts receivable |
|
275,902 |
|
304,544 |
Inventories, prepaid, investments and other |
|
58,872 |
|
56,809 |
Total current assets |
|
360,000 |
|
381,854 |
Property and equipment |
|
2,344,341 |
|
2,356,487 |
Deferred income taxes |
|
211,850 |
|
209,645 |
Total assets |
|
$ 2,916,191 |
|
$ 2,947,986 |
|
|
|
|
|
Liabilities |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accruals |
|
$ 242,710 |
|
$ 231,838 |
Share-based compensation |
|
6,466 |
|
11,014 |
Income taxes payable |
|
3,755 |
|
4,176 |
Current portion of lease obligation |
|
7,883 |
|
8,346 |
Current portion of long-term debt |
|
110,700 |
|
110,700 |
Total current liabilities |
|
371,514 |
|
366,074 |
|
|
|
|
|
Share-based compensation |
|
4,994 |
|
6,606 |
Long-term debt |
|
1,033,653 |
|
1,099,649 |
Lease obligations |
|
15,177 |
|
11,589 |
Income tax payable |
|
7,642 |
|
8,809 |
Deferred income taxes |
|
149,031 |
|
146,497 |
Total liabilities |
|
1,582,011 |
|
1,639,224 |
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
Shareholders' capital |
|
268,755 |
|
267,482 |
Contributed surplus |
|
22,529 |
|
23,750 |
Accumulated other comprehensive income |
|
285,886 |
|
254,765 |
Retained earnings |
|
757,010 |
|
762,765 |
Total shareholders' equity |
|
1,334,180 |
|
1,308,762 |
Total liabilities and shareholders' equity |
|
$ 2,916,191 |
|
$ 2,947,986 |
Consolidated Statements of (Loss) Income
|
|
Three months ended |
|
Six months ended |
||||
|
|
|
|
|
|
|
|
|
(Unaudited - in thousands of Canadian dollars, except |
|
|
|
|
|
|
|
|
Revenue |
|
$ 391,792 |
|
$ 432,770 |
|
$ 823,099 |
|
$ 916,822 |
Expenses |
|
|
|
|
|
|
|
|
Oilfield services |
|
276,075 |
|
301,503 |
|
574,865 |
|
643,702 |
Depreciation |
|
82,512 |
|
74,835 |
|
170,765 |
|
152,690 |
General and administrative |
|
15,495 |
|
14,651 |
|
30,556 |
|
29,180 |
Share-based compensation |
|
241 |
|
(6,146) |
|
4,066 |
|
(4,421) |
Foreign exchange and other (gain) loss |
|
(220) |
|
747 |
|
4,664 |
|
5,773 |
Total expenses |
|
374,103 |
|
385,590 |
|
784,916 |
|
826,924 |
Income before interest expense, accretion of |
17,689 |
|
47,180 |
|
38,183 |
|
89,898 |
|
|
|
|
|
|
|
|
|
|
Gain on asset sale |
|
(4,663) |
|
(2,160) |
|
(6,408) |
|
(2,268) |
Interest expense |
|
25,538 |
|
31,560 |
|
52,018 |
|
65,958 |
Accretion of deferred financing charges |
|
417 |
|
2,199 |
|
834 |
|
4,399 |
(Loss) income before income taxes |
|
(3,603) |
|
15,581 |
|
(8,261) |
|
21,809 |
Income taxes (recovery) |
|
|
|
|
|
|
|
|
Current income taxes |
|
328 |
|
767 |
|
1,482 |
|
1,168 |
Deferred income taxes (recovery) |
|
658 |
|
4,496 |
|
(4,113) |
|
5,856 |
Total income taxes (recovery) |
|
986 |
|
5,263 |
|
(2,631) |
|
7,024 |
Net (loss) income |
|
$ (4,589) |
|
$ 10,318 |
|
$ (5,630) |
|
$ 14,785 |
Net (loss) income attributable to: |
|
|
|
|
|
|
|
|
Common shareholders |
|
(4,538) |
|
10,302 |
|
(5,755) |
|
14,543 |
Non-controlling interests |
|
(51) |
|
16 |
|
125 |
|
242 |
|
|
(4,589) |
|
10,318 |
|
(5,630) |
|
14,785 |
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to common |
|
|
|
|
|
|
|
|
Basic |
|
$ (0.02) |
|
$ 0.06 |
|
$ (0.03) |
|
$ 0.08 |
Diluted |
|
$ (0.02) |
|
$ 0.06 |
|
$ (0.03) |
|
$ 0.08 |
Consolidated Statements of Cash Flows
|
|
Three months ended |
|
Six months ended |
||||
|
|
|
|
|
|
|
|
|
(Unaudited - in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
Cash provided by (used in) |
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ (4,589) |
|
$ 10,318 |
|
$ (5,630) |
|
$ 14,785 |
Items not affecting cash |
|
|
|
|
|
|
|
|
Depreciation |
|
82,512 |
|
74,835 |
|
170,765 |
|
152,690 |
Gain on asset sale |
|
(4,663) |
|
(2,160) |
|
(6,408) |
|
(2,268) |
Share-based compensation, net cash settlements |
|
(383) |
|
71 |
|
(5,273) |
|
(5,892) |
Unrealized foreign exchange and other |
|
(1,240) |
|
(4,555) |
|
4,495 |
|
(473) |
Accretion of deferred financing charges |
|
417 |
|
2,199 |
|
834 |
|
4,399 |
Interest expense |
|
25,538 |
|
31,560 |
|
52,018 |
|
65,958 |
Deferred income taxes (recovery) |
|
658 |
|
4,496 |
|
(4,113) |
|
5,856 |
Funds flow from operations |
|
98,250 |
|
116,764 |
|
206,688 |
|
235,055 |
Net change in non-cash working capital |
|
28,152 |
|
50,007 |
|
13,592 |
|
36,290 |
Cash provided by operating activities |
|
126,402 |
|
166,771 |
|
220,280 |
|
271,345 |
Investing activities |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
(48,426) |
|
(56,445) |
|
(103,195) |
|
(106,324) |
Proceeds from disposals of property and equipment |
|
8,116 |
|
3,299 |
|
11,387 |
|
3,454 |
Net change in non-cash working capital |
|
6,529 |
|
(3,769) |
|
24,325 |
|
3,769 |
Cash used in investing activities |
|
(33,781) |
|
(56,915) |
|
(67,483) |
|
(99,101) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
13,240 |
|
28,285 |
|
56,714 |
|
36,547 |
Repayments of long-term debt |
|
(92,126) |
|
(93,824) |
|
(147,024) |
|
(137,729) |
Lease obligation principal repayments |
|
(2,505) |
|
(1,443) |
|
(4,792) |
|
(10,387) |
Interest paid |
|
(25,055) |
|
(41,653) |
|
(52,558) |
|
(64,422) |
Issuance of common shares under share option plan |
|
148 |
|
— |
|
196 |
|
— |
Purchase of common shares held in trust |
|
(450) |
|
(412) |
|
(1,032) |
|
(947) |
Cash used in financing activities |
|
(106,748) |
|
(109,047) |
|
(148,496) |
|
(176,938) |
Net (decrease) increase in cash |
|
(14,127) |
|
809 |
|
4,301 |
|
(4,694) |
Effects of foreign exchange on cash |
|
245 |
|
(1,588) |
|
424 |
|
(1,115) |
Cash – beginning of period |
|
39,108 |
|
44,850 |
|
20,501 |
|
49,880 |
Cash – end of period |
|
$ 25,226 |
|
$ 44,071 |
|
$ 25,226 |
|
$ 44,071 |
Non-GAAP Measures
Adjusted EBITDA, Adjusted EBITDA per common share, working capital and Consolidated EBITDA. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared.
Adjusted EBITDA is used by management and investors to analyze the Company's profitability based on the Company's principal business activities prior to how these activities are financed, how assets are depreciated, amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets and fair value adjustments on financial assets and liabilities, as the Company does not deem these to relate to its core drilling and well services business. Adjusted EBITDA is not intended to represent (loss) income as calculated in accordance with IFRS.
ADJUSTED EBITDA |
Three months ended |
|
|
Six months ended |
||||||
($ thousands) |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
(Loss) income before income taxes |
(3,603) |
|
|
15,581 |
|
|
(8,261) |
|
|
21,809 |
Add-back/(deduct): |
|
|
|
|
|
|
|
|
|
|
Interest expense |
25,538 |
|
|
31,560 |
|
|
52,018 |
|
|
65,958 |
Accretion of deferred financing charges |
417 |
|
|
2,199 |
|
|
834 |
|
|
4,399 |
Depreciation |
82,512 |
|
|
74,835 |
|
|
170,765 |
|
|
152,690 |
Share-based compensation |
241 |
|
|
(6,146) |
|
|
4,066 |
|
|
(4,421) |
Gain on asset sale |
(4,663) |
|
|
(2,160) |
|
|
(6,408) |
|
|
(2,268) |
Foreign exchange and other (gain) loss |
(220) |
|
|
747 |
|
|
4,664 |
|
|
5,773 |
Adjusted EBITDA |
100,222 |
|
|
116,616 |
|
|
217,678 |
|
|
243,940 |
Consolidated EBITDA
Consolidated EBITDA, as defined in the Company's Credit Facility agreement, is used in determining the Company's compliance with its covenants. The Consolidated EBITDA is substantially similar to Adjusted EBITDA. Consolidated EBITDA is calculated on a rolling twelve-month basis.
Working Capital
Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
Certain statements herein constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule", "contemplates" or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.
Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided herein including, but not limited to, information provided in the "Funds Flow from
Forward-looking statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices which may influence customers to modify their capital programs; the status of current negotiations with the Company's customers and vendors; customer focus on safety performance; royalty regimes and effects of regulation by government agencies; existing term contracts that may not be renewed or are terminated prematurely; the Company's ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; future operating costs; the general stability of the economic and political environments in the jurisdictions where we operate; inflation, interest rate and exchange rate expectations; pandemics; and impacts of geopolitical events such as the hostilities in the
The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's services and the ability of the Company's customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company's ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; artificial intelligence development and implementation; cyber-attacks; determinations the by
In addition, the Company's operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, pandemics, pandemic mitigation strategies and the impact thereof upon the Company, its customers and its business, ongoing hostilities in the
Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company's course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.
Readers are cautioned that the lists of important factors contained herein are not exhaustive. For additional information on these and other factors that could affect the Company's business, operations or financial condition, refer to the "Risk Factors" section of the Company's Annual Information Form for the year ended
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE