XTREME DRILLING CORP Q1 2017 Highlights
(amounts in Canadian dollars, unless otherwise noted)For the three months ended March 31, 2017, the Company recorded revenue of $12.4 million as compared to $9.9 million in the fourth quarter of 2016. Revenue per day increased to $21,233 from
$20,728 in the previous quarter. Adjusted EBITDA was ($0.1) million in the quarter which is essentially flat as compared to the fourth quarter of 2016.
Operating days during the three months ended March 31, 2017, increased to 583 from 479 in the fourth quarter of 2016. In the quarter, the Company made the decision to remove the three rigs that are in the process of upgrade to 850XE from the utilization calculation. For the first quarter of 2017, utilization was 36% on the Company's 18 drilling rig fleet. Utilization has increased from a low of 19% for the second quarter of 2016.
Operating expenses are tied to operating levels and were $16,800 per operating day for the quarter ended March 31, 2017, as compared to $15,800 per operating day for the previous quarter. The increase in the cost per operating day was primarily attributable to an increase in labor-related expenses and other rig re-activation costs.
General and administrative expenses increased slightly from $2.5 million for the three months ended December 31, 2016, to $2.6 million for the first quarter of 2017. The increase is due to the impact of the exchange rate and an increase in legal and professional fees, offset by a decrease in certain personnel-related costs.
The Company's USD-revenue and expenses are impacted by the exchange rate between the US dollar ("USD") and Canadian dollar ("CAD"). For the three months ended March 31, 2017, the average exchange rate used to convert the USD-denominated revenues and expenses to CAD was $1.33/$1 USD.
Capital expenditures for the first quarter were $18.7 million, which included approximately $15.4 million related to the 850XE upgrade program. Currently the Company has an approved 2017 capital expenditure budget of up to $50.0 million USD for the optimization of the XDR 500 fleet and the 850XE upgrade capital requirements.
Xtreme announced the commencement of a Substantial Issuer Bid in the first quarter of 2017. The share repurchase program will be conducted through a modified Dutch Auction process. The Company will purchase up to $25 million of equity from shareholders in a per share price range from
$2.40 to $2.80. It is anticipated that the offer will close on June 1, 2017.
As previously announced the first 850XE upgrade was signed to a two year contract and is scheduled for delivery to Oklahoma in the third quarter of 2017. The 850XE design is Xtreme's next step in drilling innovation and technology. The proprietary design was developed specifically for today's major resource plays and is expected to be the most efficient and fastest moving "super spec" rig in the North American land market. The 850XE will be equipped with an 1,800hp AC electric drawworks, 850,000 pound capacity mast, proprietary X-pad optimizer walking system, a 7,500psi mud system with three pumps, integrated equipment monitoring and other proprietary design features. It will have a rated depth capacity in excess of 27,500 feet with 5-inch drill pipe and the ability to stand all drill pipe in the mast.
As of the date of this press release, the Company had nine of 18 XDR rigs contracted in Canada, Colorado, North Dakota and Oklahoma. Of the nine rigs contracted seven are currently working with the remaining two anticipated to commence work in June.
Three months ended | Mar 31, 2017 | Dec 31, 2016 | S | ep 30, 2016 | Jun 30, 2016 | |||
Revenue | 12,379 | 9,929 | 8,468 | 7,369 | ||||
Adjusted EBITDA1 | (78) | (148 | ) | (1,423 | ) | (5,449 | ) | |
Adjusted EBITDA as a percentage of revenue | (1 | )% | (1 | )% | (17 | )% | (74 | )% |
Adjusted EBITDA per share1 - basic ($) | - | - | (0.01 | ) | (0.07 | ) | ||
Net loss | (12,168 | ) | (11,122 | ) | (29,542 | ) | (28,699 | ) |
Net loss income per share - basic ($) | (0.14 | ) | (0.13 | ) | (0.35 | ) | (0.34 | ) |
Operating cash flows from continuing operations | (2,384 | ) | (1,032 | ) | (1,168 | ) | (10,849 | ) |
Capital assets | 245,267 | 240,656 | 243,564 | 266,188 | ||||
Total assets | 348,083 | 366,762 | 373,104 | 409,794 | ||||
Net debt2 | (88,152 | ) | (113,882 | ) | (118,863 | ) | (110,794 | ) |
Operating days1 | 583 | 479 | 433 | 364 | ||||
Utilization (percentage) | 36 | % | 25 | % | 22 | % | 19 | % |
Weighted average number of rigs in service | 18 | 21 | 21 | 21 | ||||
Total number of rigs, end of quarter | 18 | 21 | 21 | 21 | ||||
(unaudited)
Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | |
Revenue | 16,266 | 23,370 | 29,758 | 33,563 |
Adjusted EBITDA1 | 784 | 753 | 3,620 | 5,113 |
Adjusted EBITDA as a percentage of revenue | 5 % | 3% | 12% | 15% |
Adjusted EBITDA per share1 - basic ($) | 0.01 | 0.03 | 0.08 | 0.10 |
Net loss | (7,350) | (36,069) | (40,267) | (3,860) |
Net loss per share - basic ($) | (0.09) | (0.44) | (0.49) | (0.05) |
Operating cash flows from continuing operations | (2,981) | 3,059 | 11,731 | 7,218 |
Capital assets | 276,521 | 30,506 | 318,639 | 340,800 |
Total assets | 316,270 | 361,809 | 394,121 | 427,303 |
Net debt2 | 90,242 | 96,123 | 93,389 | 112,113 |
Operating days1 | 565 | 932 | 1,069 | 1,072 |
Utilization (percentage) | 30% | 48% | 55% | 56% |
Weighted average number of rigs in service | 21 | 21 | 21 | 21 |
Total number of rigs, end of quarter | 21 | 21 | 21 | 21 |
OUTLOOK
The recent U.S. land rig count approached 850, after bottoming out at fewer than 400 rigs in May of 2016. The majority of rigs that have gone back to work in the U.S. are high spec AC electric rigs. The market share of AC rigs in the U.S. has increased from 40% in the third quarter of 2014 to 67% currently. In fact, Xtreme estimates that approximately 600 AC rigs have returned to work as compared to 725 that were working at the peak of the market in the third quarter of 2014. The supply of AC electric shale capable drilling rigs is quickly going back to work in the United States. In certain basins, this tightening of supply is beginning to result in pricing increases.
Xtreme's 18 rig U.S. fleet and three rig Canadian fleet are 100% AC electric. The Company currently has eight of 10 XDR 500 rigs contracted in the United States with seven currently operating and the eighth expected to begin work in early June. In Canada, Xtreme has one of three XDR 200 rigs contracted and set to commence operation in June.
The pace of rig re-activations in the United States has put upward pressure on crew wages along with other re-activation expenses. In the second quarter, the Company will incur additional expenses related to the re-activation and mobilization of several rigs. This will reduce operating margins as not all of the cost increases are able to be passed through to the operator in the near term. However, if the current trend of re-activations continues then Xtreme anticipates that operating rates will begin to increase in the back half of 2017.
The process of reviewing options for the XDR 200 and 300 series rigs is progressing. The Company anticipates formal discussions with potential buyers or partners to commence in the near future with a target of closing any transaction in the second half of 2017. The goal in this process is to further focus Xtreme as a high/super spec US resource play drilling Company with ten XDR 500 rigs and three 850XE. Any proceeds from asset sales would provide additional liquidity and optionality to deploy in US resource plays.
In order to create value and deliver liquidity to shareholders the Company implemented a Substantial Issuer Bid to repurchase up to $25 million of Xtreme stock. The price range has been set between $2.40 and $2.80 per share and is open until June 1, 2017. The reduction in shares outstanding should add value for shareholders and the sale of assets provide additional liquidity and optionality.
Xtreme will exit 2017 with a fully optimized fleet of larger rigs, three 850XE rigs and 10 XDR 500 rigs, which should maintain high utilization levels in the current industry environment. This increased utilization and expected cash flow coupled with ample liquidity positions Xtreme to take advantage of future strategic opportunities.
Xtreme Drilling and Coil Services Corp. published this content on 04 May 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 04 May 2017 14:29:22 UTC.
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