CALGARY, AB,
- Revenue for the second quarter of 2023 was
$432.8 million , a 26 percent increase from the second quarter of 2022 revenue of$344.1 million . - Revenue by geographic area:
Canada -$80.6 million , 19 percent of total;United States -$276.8 million , 64 percent of total; and- International -
$75.4 million , 17 percent of total. - Canadian drilling recorded 2,131 operating days in the second quarter of 2023, a 10 percent decrease from 2,369 operating days in the second quarter of 2022. Canadian well servicing recorded 11,804 operating hours in the second quarter of 2023, a two percent decrease from 12,099 operating hours in the second quarter of 2022. As a result of suspensions of operations related to forest wildfires Canadian drilling lost approximately 205 operating days.
United States drilling recorded 4,302 operating days in the second quarter of 2023, a one percent increase from 4,277 operating days in the second quarter of 2022.United States well servicing recorded 30,647 operating hours in the second quarter of 2023, which remained consistent with 30,725 operating hours in the second quarter of 2022.- International drilling recorded 1,247 operating days in the second quarter of 2023, a 21 percent increase from 1,030 operating days recorded in the second quarter of 2022.
- Adjusted EBITDA for the second quarter of 2023 was
$116.6 million , a 71 percent increase from Adjusted EBITDA of$68.3 million for the second quarter of 2022. - Funds flow from operations for the second quarter of 2023 increased 43 percent to
$116.8 million from$81.5 million in the second quarter of the prior year. - General and administrative expense increased 20 percent and totaled
$14.7 million (3.4 percent of revenue) in the second quarter of 2023, compared with$12.2 million (3.5 percent of revenue) in the second quarter of 2022. - Net capital purchases for the second quarter of 2023 were
$53.1 million , consisting of$3.8 million in upgrade capital and$52.7 million in maintenance capital, offset by sale proceeds of$3.3 million . Capital expenditures for the 2023 year are targeted to be in line with prior guidance of approximately$157.0 million primarily related to maintenance expenditures. In addition to the maintenance expenditures, there are certain growth projects for our customers of which$18.3 million has been funded by them. The Company may continue to consider additional upgrade or growth projects in response to customer demand upon appropriate contract terms. - Total debt, net of cash, has been reduced by
$112.5 million sinceDecember 31, 2022 . Our debt reduction for 2023 is targeted to be approximately$200.0 million . Our targeted debt reduction for the period beginning 2023 to the end of 2025 is approximately$600.0 million . If industry conditions change, these targets could be increased or decreased. - The Company is pleased to announce it has completed the publication of its third annual Sustainability Report for the year-ended
December 31, 2022 . The report, available at esg.ensignenergy.com, highlights the Company's environmental, social, and governance ("ESG") performance over the past year.
Revenue for the second quarter of 2023 was
Adjusted EBITDA totaled
Net income attributable to common shareholders for the second quarter of 2023 was
Funds flow from operations increased 43 percent to
The outlook for oilfield services continues to be constructive despite the recent volatility in global crude oil and natural gas commodity prices and uncertain global economic conditions. Global inflationary concerns continue to prompt central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have contributed to uncertainty for global economies related to recession risk and economic growth. These factors continue to impact global energy commodity prices and add uncertainty to the macro-economic outlook over the short-term. Furthermore, the recent decline in the US rig count has contributed to activity uncertainty and rig rate fluctuations over the short-term. However, despite these short-term headwinds, demand for crude oil continues to increase year-over-year and OPEC+ nations continue to moderate supply to respond to market conditions.
Over the near term, there remains uncertainty regarding the impacts of ongoing hostilities in
The Company's operating days remained consistent in the three months ended
The average
The Company's working capital at
The Company's available liquidity, consisting of cash and available borrowings under its
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 and Adjusted EBITDA per common share. 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.
FINANCIAL AND OPERATING HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per common share data and operating information)
Three months ended | Six months ended | ||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||
Revenue | $ 432,770 | $ 344,123 | 26 | $ 916,822 | $ 676,799 | 35 | |
Adjusted EBITDA 1 | 116,616 | 68,332 | 71 | 243,940 | 138,297 | 76 | |
Adjusted EBITDA per common share 1 | |||||||
Basic | 60 | 60 | |||||
Diluted | 43 | 61 | |||||
Net income (loss) attributable to common | 10,302 | (28,138) | nm | 14,543 | (21,551) | nm | |
Net income (loss) attributable to common shareholders | |||||||
Basic | nm | nm | |||||
Diluted | nm | nm | |||||
Cash provided by operating activities | 166,771 | 99,520 | 68 | 271,345 | 154,076 | 76 | |
Funds flow from operations | 116,764 | 81,497 | 43 | 235,055 | 158,238 | 49 | |
Funds flow from operations per common | |||||||
Basic | 36 | 36 | |||||
Diluted | 21 | 35 | |||||
Total debt, net of cash | 1,277,197 | 1,357,537 | (6) | 1,277,197 | 1,357,537 | (6) | |
Weighted average common shares - basic | 183,944 | 171,646 | 7 | 183,931 | 167,456 | 10 | |
Weighted average common shares - diluted | 185,031 | 173,157 | 7 | 185,388 | 168,325 | 10 | |
Drilling | 2023 | 2022 | % change | 2023 | 2022 | % change | |
Number of marketed rigs 2 | |||||||
Canada 3 | 115 | 123 | (7) | 115 | 123 | (7) | |
United States | 85 | 89 | (4) | 85 | 89 | (4) | |
International 4 | 32 | 34 | (6) | 32 | 34 | (6) | |
Total | 232 | 246 | (6) | 232 | 246 | (6) | |
Operating days 5 | |||||||
Canada 3 | 2,131 | 2,369 | (10) | 5,931 | 6,097 | (3) | |
United States | 4,302 | 4,277 | 1 | 8,919 | 7,965 | 12 | |
International 4 | 1,247 | 1,030 | 21 | 2,351 | 1,903 | 24 | |
Total | 7,680 | 7,676 | 0 | 17,201 | 15,965 | 8 | |
Well Servicing | 2023 | 2022 | % change | 2023 | 2022 | % change | |
Number of rigs | |||||||
Canada | 47 | 52 | (10) | 47 | 52 | (10) | |
United States | 47 | 48 | (2) | 47 | 48 | (2) | |
Total | 94 | 100 | (6) | 94 | 100 | (6) | |
Operating hours | |||||||
Canada | 11,804 | 12,099 | (2) | 25,580 | 23,359 | 10 | |
United States | 30,647 | 30,725 | — | 58,564 | 60,414 | (3) | |
Total | 42,451 | 42,824 | (1) | 84,144 | 83,773 | — |
nm | - calculation not meaningful |
1 | Adjusted EBITDA and Adjusted EBITDA per common share are not measures that have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and accordingly, may not be comparable to similar measures used by other companies. Non-GAAP measures are defined in the Non-GAAP Measures section. |
2 | Total owned rigs: |
3 | Excludes coring rigs. |
4 | Includes workover rigs. |
5 | Defined as contract drilling days, between spud to rig release. |
FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS
As at ($ thousands) |
| ||||
Working capital (deficit) 1, 2 | (1,188,071) | (707,800) | 102,830 | ||
Cash | 44,071 | 49,880 | 38,994 | ||
Total debt 3 | 1,321,268 | 1,439,575 | 1,396,531 | ||
Total debt, net of cash 3 | 1,277,197 | 1,389,695 | 1,357,537 | ||
Total debt and other long-term financial liabilities 3 | 1,334,344 | 1,445,523 | 1,408,706 | ||
Total assets | 3,030,460 | 3,183,904 | 3,011,267 | ||
Total debt to total debt plus equity ratio 3 | 0.51 | 0.53 | 0.53 |
1 See non-GAAP Measures section. |
2 Change in working capital (deficit) was largely due to the Company's revolving credit facility and unsecured Senior notes being classified as current. |
3 For presentation purposes the Company includes current and long-term debt under total debt and the comparatives have been revised to conform with current year's presentation. |
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||||||
Capital expenditures | |||||||||||||||
Upgrade/growth | 3,772 | 28,495 | (87) | 12,028 | 36,586 | (67) | |||||||||
Maintenance | 52,673 | 25,784 | nm | 94,296 | 49,644 | 90 | |||||||||
Proceeds from disposals of property and | (3,299) | (4,189) | (21) | (3,454) | (46,936) | (93) | |||||||||
Net capital expenditures | 53,146 | 50,090 | 6 | 102,870 | 39,294 | nm |
nm - calculation not meaningful |
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Revenue | |||||||||||
80,618 | 78,684 | 2 | 220,734 | 189,950 | 16 | ||||||
276,781 | 203,507 | 36 | 551,334 | 370,330 | 49 | ||||||
International | 75,371 | 61,932 | 22 | 144,754 | 116,519 | 24 | |||||
Total revenue | 432,770 | 344,123 | 26 | 916,822 | 676,799 | 35 | |||||
Oilfield services expense | 301,503 | 263,582 | 14 | 643,702 | 515,403 | 25 |
Revenue for the three months ended
The increase in total revenue during the second quarter of 2023 was primarily due to favourable industry conditions, revenue rate improvements, foreign exchange translation, and supportive oil commodity prices.
Revenue increased two percent to
Canadian revenue accounted for 19 percent of the Company's total revenue in the second quarter of 2023 (2022 - 23 percent) and 24 percent (2022 - 28 percent) for the first six months of 2023.
The Company's Canadian drilling operations recorded 2,131 operating days in the second quarter of 2023, compared to 2,369 operating days for the second quarter of 2022, a decrease of 10 percent. For the six months ended
The operating results for the Company's Canadian operations in the second quarter of 2023 were negatively impacted by weather and related events, including forest fires and flooding, that temporarily delayed certain drilling programs. However, the financial results for the Company's Canadian operations for the first half of 2023 were positively impacted by revenue rate increases year-over-year due to improved industry conditions.
During the first half of 2023, the Company transferred one drilling rig from
The Company's
The Company's
Drilling rig operating days increased by one percent to 4,302 operating days in the second quarter of 2023 from 4,277 operating days in the second quarter of 2022 and increased by 12 percent to 8,919 operating days in the first six months ended
Overall operating and financial results for the Company's
During the first half of 2023, the Company transferred one drilling rig from
The Company's international operations recorded revenue of
The Company's international operations contributed 17 percent of the total revenue in the second quarter of 2023 (2022 - 18 percent) and 16 percent of the Company's revenue in the first six months of 2023 (2022 - 17 percent).
International operating days for the three months ended
Operating and financial results from international operations reflect improving industry conditions and increasing drilling activity. In addition, the Company's operational activity increased year-over-year as a result of two
The financial results from the Company's international operations paid in
During the first half of 2023, the Company transferred two under-utilized drilling rigs into its international operations reserve fleet.
DEPRECIATION
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Depreciation | 74,835 | 68,692 | 9 | 152,690 | 138,672 | 10 |
Depreciation expense totaled
GENERAL AND ADMINISTRATIVE
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
General and administrative | 14,651 | 12,209 | 20 | 29,180 | 23,099 | 26 | |||||
% of revenue | 3.4 | 3.5 | 3.2 | 3.4 |
General and administrative expense increased 20 percent to
FOREIGN EXCHANGE AND OTHER LOSS
Three months ended | Six months ended | |||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | ||
Foreign exchange and other loss | 747 | 4,047 | (82) | 5,773 | 2,702 | nm |
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) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Interest expense | 31,560 | 27,563 | 15 | 65,958 | 52,747 | 25 |
Interest expense was incurred on the Company's
Interest expense increased by 15 percent for the second quarter of 2023 compared to the second quarter of 2022. Interest expense increased by 25 percent for the first six months ended
INCOME TAXES (RECOVERY)
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Current income taxes (recovery) | 767 | (92) | nm | 1,168 | (1,762) | nm | |||||
Deferred taxes income (recovery) | 4,496 | (8,124) | nm | 5,856 | (19,656) | nm | |||||
Total income taxes (recovery) | 5,263 | (8,216) | nm | 7,024 | (21,418) | nm | |||||
Effective income tax rate (%) | 33.8 | 22.6 | 50 | 32.2 | 49.9 | (35) |
nm - calculation not meaningful |
The effective income tax rate for the three months ended
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per common | Three months ended | Six months ended | |||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Cash provided by operating activities | 166,771 | 99,520 | 68 | 271,345 | 154,076 | 76 | |||||
Funds flow from operations | 116,764 | 81,497 | 43 | 235,055 | 158,238 | 49 | |||||
Funds flow from operations percommon share | 36 | 36 | |||||||||
Working capital 1 | (1,188,071) | (707,800) | 68 | (1,188,071) | (707,800) | 68 |
1 Comparative figure as at |
During the three months ended
At
The Company currently expects funds generated by operations, combined with current and future credit facilities, to fully support the Company's current operating and capital requirements. The Company's Credit Facility provides for total borrowings of
INVESTING ACTIVITIES
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Purchase of property and equipment | (56,445) | (54,279) | 4 | (106,324) | (86,230) | 23 | |||||
Proceeds from disposals of property | 3,299 | 4,189 | (21) | 3,454 | 46,936 | (93) | |||||
Distribution to non-controlling interest | — | (1,852) | nm | — | (1,852) | nm | |||||
Net change in non-cash working capital | (3,769) | 3,205 | nm | 3,769 | 8,902 | (58) | |||||
Cash used in investing activities | (56,915) | (48,737) | 17 | (99,101) | (32,244) | nm |
nm - calculation not meaningful |
Net purchases of property and equipment for the second quarter of 2023 totaled
FINANCING ACTIVITIES
Three months ended | Six months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Proceeds from long-term debt | 28,285 | 26,705 | 6 | 36,547 | 28,605 | 28 | |||||
Repayments of long-term debt | (93,824) | (23,460) | nm | (137,729) | (65,394) | nm | |||||
Lease obligation principal | (1,443) | (2,291) | (37) | (10,387) | (4,189) | nm | |||||
Interest paid | (41,653) | (41,434) | 1 | (64,422) | (53,887) | 20 | |||||
Issuance of common shares under | — | — | — | — | 36 | nm | |||||
Purchase of common shares held in | (412) | (405) | 2 | (947) | (780) | 21 | |||||
Cash used in financing activities | (109,047) | (40,885) | nm | (176,938) | (95,609) | 85 |
nm - calculation not meaningful |
The Company's available bank facilities consist of a
In the fourth quarter of 2022, the Company classified its Credit Facility as current. Furthermore, during the second quarter of 2023, the Company classified the Senior Notes as current. The Company is in discussion with its banking syndicate on extending its existing revolving Credit Facility and on obtaining a new term loan facility, which facility will be used to retire the Company's Senior Notes due in
The Company may at any time and from time to time acquire Senior Notes for cancellation by means of open market repurchases or negotiated transactions. The Company is limited in the acquisition and cancellation of the Senior Notes up to
Covenants
The following is a list of the Company's currently applicable covenants and the calculations as at
Covenant | ||||
The Credit Facility | ||||
Total Debt to Consolidated EBITDA1 | ≤ 5.00 | 2.69 | ||
Consolidated EBITDA to Consolidated Interest Expense1,2 | ≥ 2.50 | 3.69 | ||
Consolidated Senior Debt to Consolidated EBITDA1,3 | ≤ 2.50 | 1.52 |
1 Please refer to Non-GAAP Measures for Consolidated EBITDA definition. |
2 Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis. |
3 Consolidated Senior Debt is defined as Consolidated Total Debt minus Subordinated Debt. |
As at
The Credit Facility
The Credit Facility agreement, available on SEDAR+ including amendments, requires that the Company comply with certain covenants including Consolidated Total Debt to Consolidated EBITDA ratio, Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Senior Debt to Consolidated EBITDA ratio as detailed above.
The Credit Facility also contains certain covenants that place restrictions on the Company's ability to repurchase or redeem Senior Notes; to create, incur or assume additional indebtedness; change the Company's primary business; enter into mergers or amalgamations; and dispose of property. In the most recent amendment and restatement of the Credit Facility agreement, dated
The Senior Notes
The note indenture governing the Senior Notes, available on SEDAR+, contains certain restrictions and exemptions on the Company's ability to pay dividends, purchase and redeem shares and subordinated debt of the Company, and make certain restricted investments. Limitations on these restrictions are tempered by the existence of a number of exceptions to the general prohibition, including baskets allowing for restricted payments.
The note indenture also restricts the Company's ability to incur additional indebtedness if the Fixed Charge Coverage Ratio determined on a pro forma basis for the most recently ended four fiscal quarter period for which internal financial statements are available is not at least 2.0 to 1.0. As of
During the first six months ended
- transferred nine, four, and two under-utilized drilling rigs to its Canadian,
United States , and international operations reserve fleet, respectively; - transferred one drilling rig from
the United States toCanada ; - transferred one drilling rig from the reserve fleet to the marketed fleet in
the United States .
The Company is currently directing capital expenditures primarily to maintenance capital items and selective rig or fleet upgrades.
Industry Overview
The outlook for oilfield services continues to be constructive despite volatile commodity prices and macro-economic headwinds. Recessionary pressures, tight fiscal policies, and the potential for slowing economies and other considerations continue to influence commodity prices. These factors continue to add uncertainty to the outlook for crude oil demand and commodity prices.
Constructively, demand for crude oil continues to improve year-over-year and OPEC+ nations continually monitor the oil markets and may implement cuts to production to moderate supply. Global crude oil prices recently have held steady, with the benchmark price of West Texas Intermediate ("WTI") averaging US
Over the short-term, depressed natural gas commodity prices have impacted the industry rig count in
Over the short-term, there remains uncertainty regarding macroeconomic conditions that may impact supply and demand for, and pricing of, crude oil and natural gas and related oilfield services. These factors include but are not limited to, recession risk and global economic health, financial sector stress, the impact of ongoing hostilities in
The Company remains committed to disciplined capital allocation and debt repayment. The Company has targeted approximately
Capital expenditures for the 2023 year are targeted to be in line with prior guidance of approximately
Canadian activity, representing 24 percent of total revenue in the first half of 2023, decreased in the second quarter due to seasonal spring-break up and unforeseen weather events, including forest fires and flooding that temporarily delayed certain drilling programs. Operations impacted by the fires or flooding have recommenced. We expect activity to increase in the third quarter due to supportive industry conditions. We expect activity in
As of
As of
International activity, representing 16 percent of total revenue in the first half of 2023, improved in the second quarter of 2023 as a third Company rig in
Overall, the Company's international activity is expected to improve in the third quarter of 2023 as operations are expected to increase from seven to eight active rigs in
As of
The Company is subject to numerous risks and uncertainties. A discussion of certain risks faced by the Company may be found hereinbelow and 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.
A conference call will be held to discuss the Company's second quarter 2023 results at
Consolidated Statements of Financial Position
As at |
| |||
(Unaudited - in thousands of Canadian dollars) | ||||
Assets | ||||
Current Assets | ||||
Cash | $ 44,071 | $ 49,880 | ||
Accounts receivable | 298,703 | 359,933 | ||
Inventories, prepaid, investments and other | 53,902 | 60,758 | ||
Income taxes receivable | — | 40 | ||
Total current assets | 396,676 | 470,611 | ||
Property and equipment | 2,430,120 | 2,516,923 | ||
Deferred income taxes | 203,664 | 196,370 | ||
Total assets | $ 3,030,460 | $ 3,183,904 | ||
Liabilities | ||||
Current Liabilities | ||||
Accounts payable and accruals | $ 245,320 | $ 268,243 | ||
Share-based compensation | 7,345 | 11,735 | ||
Income taxes payable | 4,663 | 4,423 | ||
Current portion of lease obligation | 6,151 | 11,324 | ||
Current portion of long-term debt | 1,321,268 | 882,686 | ||
Total current liabilities | 1,584,747 | 1,178,411 | ||
Share-based compensation | 4,986 | 13,635 | ||
Long-term debt | — | 556,889 | ||
Lease obligations | 7,803 | 5,948 | ||
Income tax payable | 5,273 | 5,394 | ||
Deferred income taxes | 145,483 | 134,857 | ||
Total liabilities | 1,748,292 | 1,895,134 | ||
Shareholders' Equity | ||||
Shareholders' capital | 268,467 | 267,790 | ||
Contributed surplus | 22,720 | 23,398 | ||
Accumulated other comprehensive income | 254,909 | 276,053 | ||
Retained earnings | 736,072 | 721,529 | ||
Total shareholders' equity | 1,282,168 | 1,288,770 | ||
Total liabilities and shareholders' equity | $ 3,030,460 | $ 3,183,904 |
Consolidated Statements of Income (Loss)
Three months ended | Six months ended | |||||||
(Unaudited - in thousands of Canadian dollars, except | ||||||||
Revenue | $ 432,770 | $ 344,123 | $ 916,822 | $ 676,799 | ||||
Expenses | ||||||||
Oilfield services | 301,503 | 263,582 | 643,702 | 515,403 | ||||
Depreciation | 74,835 | 68,692 | 152,690 | 138,672 | ||||
General and administrative | 14,651 | 12,209 | 29,180 | 23,099 | ||||
Share-based compensation | (6,146) | 3,560 | (4,421) | 13,959 | ||||
Foreign exchange and other loss | 747 | 4,047 | 5,773 | 2,702 | ||||
Total expenses | 385,590 | 352,090 | 826,924 | 693,835 | ||||
Income (loss) before interest expense, accretion of | 47,180 | (7,967) | 89,898 | (17,036) | ||||
Gain on asset sale | (2,160) | (1,354) | (2,268) | (31,296) | ||||
Interest expense | 31,560 | 27,563 | 65,958 | 52,747 | ||||
Accretion of deferred financing charges | 2,199 | 2,199 | 4,399 | 4,401 | ||||
Income (loss) before income taxes | 15,581 | (36,375) | 21,809 | (42,888) | ||||
Income taxes (recovery) | ||||||||
Current income taxes (recovery) | 767 | (92) | 1,168 | (1,762) | ||||
Deferred income taxes (recovery) | 4,496 | (8,124) | 5,856 | (19,656) | ||||
Total income taxes (recovery) | 5,263 | (8,216) | 7,024 | (21,418) | ||||
Net income (loss) | $ 10,318 | $ (28,159) | $ 14,785 | $ (21,470) | ||||
Net income (loss) attributable to: | ||||||||
Common shareholders | 10,302 | (28,138) | 14,543 | (21,551) | ||||
Non-controlling interests | 16 | (21) | 242 | 81 | ||||
10,318 | (28,159) | 14,785 | (21,470) | |||||
Net income (loss) attributable to common | ||||||||
Basic | $ 0.06 | $ (0.17) | $ 0.08 | $ (0.13) | ||||
Diluted | $ 0.06 | $ (0.17) | $ 0.08 | $ (0.13) |
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 income (loss) | $ 10,318 | $ (28,159) | $ 14,785 | $ (21,470) | ||||
Items not affecting cash | ||||||||
Depreciation | 74,835 | 68,692 | 152,690 | 138,672 | ||||
Gain on asset sale | (2,160) | (1,354) | (2,268) | (31,296) | ||||
Share-based compensation, net cash settlements | 71 | 1,823 | (5,892) | 12,222 | ||||
Unrealized foreign exchange and other | (4,555) | 18,857 | (473) | 22,618 | ||||
Accretion of deferred financing charges | 2,199 | 2,199 | 4,399 | 4,401 | ||||
Interest expense | 31,560 | 27,563 | 65,958 | 52,747 | ||||
Deferred income taxes (recovery) | 4,496 | (8,124) | 5,856 | (19,656) | ||||
Funds flow from operations | 116,764 | 81,497 | 235,055 | 158,238 | ||||
Net change in non-cash working capital | 50,007 | 18,023 | 36,290 | (4,162) | ||||
Cash provided by operating activities | 166,771 | 99,520 | 271,345 | 154,076 | ||||
Investing activities | ||||||||
Purchase of property and equipment | (56,445) | (54,279) | (106,324) | (86,230) | ||||
Proceeds from disposals of property and equipment | 3,299 | 4,189 | 3,454 | 46,936 | ||||
Distribution to non-controlling interest | — | (1,852) | — | (1,852) | ||||
Net change in non-cash working capital | (3,769) | 3,205 | 3,769 | 8,902 | ||||
Cash used in investing activities | (56,915) | (48,737) | (99,101) | (32,244) | ||||
Financing activities | ||||||||
Proceeds from long-term debt | 28,285 | 26,705 | 36,547 | 28,605 | ||||
Repayments of long-term debt | (93,824) | (23,460) | (137,729) | (65,394) | ||||
Lease obligation principal repayments | (1,443) | (2,291) | (10,387) | (4,189) | ||||
Interest paid | (41,653) | (41,434) | (64,422) | (53,887) | ||||
Issuance of common shares under share option plan | — | — | — | 36 | ||||
Purchase of common shares held in trust | (412) | (405) | (947) | (780) | ||||
Cash used in financing activities | (109,047) | (40,885) | (176,938) | (95,609) | ||||
Net increase (decrease) in cash | 809 | 9,898 | (4,694) | 26,223 | ||||
Effects of foreign exchange on cash | (1,588) | (610) | (1,115) | (534) | ||||
Cash – beginning of period | 44,850 | 29,706 | 49,880 | 13,305 | ||||
Cash – end of period | $ 44,071 | $ 38,994 | $ 44,071 | $ 38,994 |
Non-GAAP Measures
Adjusted EBITDA per common share and Consolidated EBITDA. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies.
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 net loss as calculated in accordance with IFRS.
ADJUSTED EBITDA | Three months ended | Six months ended | ||||||||
($ thousands) | 2023 | 2022 | 2023 | 2022 | ||||||
Income (loss) before income taxes | 15,581 | (36,375) | 21,809 | (42,888) | ||||||
Add-back/(deduct): | ||||||||||
Interest expense | 31,560 | 27,563 | 65,958 | 52,747 | ||||||
Accretion of deferred financing charges | 2,199 | 2,199 | 4,399 | 4,401 | ||||||
Depreciation | 74,835 | 68,692 | 152,690 | 138,672 | ||||||
Share-based compensation | (6,146) | 3,560 | (4,421) | 13,959 | ||||||
Gain on asset sale | (2,160) | (1,354) | (2,268) | (31,296) | ||||||
Foreign exchange and other loss | 747 | 4,047 | 5,773 | 2,702 | ||||||
Adjusted EBITDA | 116,616 | 68,332 | 243,940 | 138,297 |
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.
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
These 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 may pressure customers to modify their capital programs; the status of current negotiations with the Company's customers and vendors; customer focus on safety performance; 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; the general stability of the economic and political environments in the jurisdictions where we operate, pandemics, and impacts of geopolitical events such as the hostilities between
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; pandemics; determinations 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, pandemics mitigation strategies and the impact thereof upon the Company, its customers and its business, ongoing hostilities between
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.
For additional information refer to the "Risks and Uncertainties" section herein and 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
© Canada Newswire, source