SECOND QUARTER HIGHLIGHTS
- Revenue for the second quarter of 2021 was
$212.3 million , a nine percent increase from the second quarter of 2020 revenue of$194.8 million . - Revenue by geographic area:
Canada -$31.4 million , 15 percent of total;United States -$130.8 million , 62 percent of total; and- International -
$50.1 million , 23 percent of total. - Canadian drilling recorded 1,058 operating days in the second quarter of 2021, an increase of 681 drilling days from 377 operating days in the second quarter of 2020. Canadian well servicing recorded 8,027 operating hours in the second quarter of 2021, an increase of 4,432 operating hours from 3,595 operating hours in the second quarter of 2020.
United States drilling recorded 2,899 operating days in the second quarter of 2021, a 31 percent increase from 2,214 operating days in the second quarter of 2020.United States well servicing recorded 33,080 operating hours in the second quarter of 2021, a 71 percent increase from 19,363 operating hours in the second quarter of 2020.- International drilling recorded 844 operating days in the second quarter of 2021, a 20 percent increase from 704 operating days recorded in the second quarter of 2020.
- Adjusted EBITDA for the second quarter of 2021 was
$45.6 million , a 21 percent decrease from Adjusted EBITDA of$58.1 million for the second quarter of 2020. - Funds flow from operations for the second quarter of 2021 increased 57 percent to
$41.3 million from$26.3 million in the second quarter of the prior year. - During the second quarter of 2021, the Company received a
$5.1 million Canada Emergency Wage Subsidy ("CEWS") payment from theGovernment of Canada . The wage subsidy received partially offset the decrease in Adjusted EBITDA and net loss attributable to common shareholders. - Net capital purchases for the second quarter of 2021 were
$11.8 million consisting of$9 .5 million in maintenance capital,$4.0 million in upgrade capital, offset by proceeds of$1.8 million from disposals. Planned capital expenditures for the 2021 year remain at$50.0 million , of which approximately$40.0 million will be maintenance capital. - During the second quarter of 2021, the Company recognized
$6.0 million of standby revenue and$2.7 million of contract cancellation or early termination fees. - General and administrative expense decreased 17 percent to
$8.9 million for the second quarter of 2021 from$10.7 million for the second quarter of 2020. - Over the second quarter of 2021, US
$9.1 million face value of Senior Notes were repurchased by the Company in the open market for cancellation, recognizing a gain of$2.1 million . (US$1.7 million ). - Total debt for the second quarter of 2021 decreased by
$30.3 million to$1,333.4 million as ofJune 30, 2021 , from$1,363.7 million as ofMarch 31, 2021 . - On
July 29, 2021 , the Company acquired Nabors Industries Ltd.'s fleet of 35 land-based drilling rigs located inCanada , as well as related equipment and certain real property for$117.5 million .
OVERVIEW
Revenue for the second quarter of 2021 was
Adjusted EBITDA totaled
Net loss attributable to common shareholders for the second quarter of 2021 was
During the second quarter and the first half of 2021, the Company received a
Funds flow from operations increased 57 percent to
Year to date in 2021, macro-economic conditions impacting the oil and natural gas industry continued its effort to recover from the significant fall out of the novel coronavirus ("COVID-19") pandemic. Rising vaccination rates in several nations have resulted in governments and health authorities easing travel and social distancing restrictions, increasing global economic activity and mobility. While still below pre-COVID-19 pandemic levels, the easing of restrictions in combination with rising global economic growth has resulted in a recovering demand for crude oil. Furthermore, the oil and natural gas market continues to be supported by OPEC+ nations' supply cuts. The moderated supply in combination with rising demand has resulted in supportive global commodity prices for oil and natural gas producers, driving oilfield services activity improvements year-over-year in the second quarter of 2021.
While activity has improved from 2020 lows in the second quarter of 2021, industry operating conditions are still recovering from the impacts of the COVID-19 pandemic. As a result, the Company's operating and financial results continue to show residual impacts resulting from the events of 2020.
Over the short term, there remains a degree of uncertainty regarding the macro-economic conditions that will impact our business including the resolution of the COVID-19 pandemic, the degree and severity of COVID-19 restrictions, setbacks to COVID-19 vaccine distribution and efficacy, virus mutations, and other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.
The Company's operating days were lower in the first six months of 2021 when compared to the same period in 2020 as operations are recovering from the significant and negative macroeconomic and industry conditions seen since March of 2020 including but not limited to, the impact of the COVID-19 pandemic and subsequent lockdown related restrictions, resulting in decreased demand for crude oil and increased market supply. The weakening year-over-year of
Working capital at
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 measure 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 | ||||||||||||||||||||
2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||
Revenue | $ | 212,306 | $ | 194,759 | 9 | $ | 430,850 | $ | 578,620 | (26) | |||||||||||
Adjusted EBITDA 1 | 45,645 | 58,060 | (21) | 95,543 | 149,307 | (36) | |||||||||||||||
Adjusted EBITDA per common share 1 | |||||||||||||||||||||
Basic | (22) | (36) | |||||||||||||||||||
Diluted | (22) | (36) | |||||||||||||||||||
Net loss attributable to common shareholders | (52,292) | (17,077) | nm | (95,842) | (46,327) | nm | |||||||||||||||
Net loss attributable to common shareholders per common share | |||||||||||||||||||||
Basic | nm | nm | |||||||||||||||||||
Diluted | nm | nm | |||||||||||||||||||
Cash provided by operating activities | 53,185 | 127,432 | (58) | 80,022 | 190,164 | (58) | |||||||||||||||
Funds flow from operations | 41,326 | 26,338 | 57 | 87,853 | 110,833 | (21) | |||||||||||||||
Funds flow from operations per common share | |||||||||||||||||||||
Basic | 56 | (21) | |||||||||||||||||||
Diluted | 56 | (21) | |||||||||||||||||||
Total long term debt | 1,333,369 | 1,555,274 | (14) | 1,333,369 | 1,555,274 | (14) | |||||||||||||||
Weighted average common shares - basic (000s) | 162,295 | 162,729 | — | 162,481 | 162,728 | — | |||||||||||||||
Weighted average common shares - diluted (000s) | 162,642 | 162,791 | — | 162,773 | 162,857 | — | |||||||||||||||
Drilling | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||||||||
Number of marketed rigs 2 | |||||||||||||||||||||
92 | 101 | (9) | 92 | 101 | (9) | ||||||||||||||||
93 | 122 | (24) | 93 | 122 | (24) | ||||||||||||||||
International 4 | 42 | 43 | (2) | 42 | 43 | (2) | |||||||||||||||
Total | 227 | 266 | (15) | 227 | 266 | (15) | |||||||||||||||
Operating days 5 | |||||||||||||||||||||
1,058 | 377 | nm | 2,904 | 3,479 | (17) | ||||||||||||||||
2,899 | 2,214 | 31 | 5,480 | 7,355 | (25) | ||||||||||||||||
International 4 | 844 | 704 | 20 | 1,703 | 2,142 | (20) | |||||||||||||||
Total | 4,801 | 3,295 | 46 | 10,087 | 12,976 | (22) | |||||||||||||||
Well Servicing | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||||||||
Number of rigs | |||||||||||||||||||||
52 | 52 | — | 52 | 52 | — | ||||||||||||||||
48 | 47 | 2 | 48 | 47 | 2 | ||||||||||||||||
Total | 100 | 99 | 1 | 100 | 99 | 1 | |||||||||||||||
Operating hours | |||||||||||||||||||||
8,027 | 3,595 | nm | 17,117 | 15,827 | 8 | ||||||||||||||||
33,080 | 19,363 | 71 | 63,045 | 50,570 | 25 | ||||||||||||||||
Total | 41,107 | 22,958 | 79 | 80,162 | 66,397 | 21 |
nm - calculation not meaningful | |
1. | Refer to Adjusted EBITDA calculation in Non-GAAP Measures |
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 capital1 | 85,440 | 98,612 | 131,761 | |||||
Cash | 19,532 | 44,198 | 102,655 | |||||
Long-term debt | 1,333,369 | 1,384,605 | 1,555,274 | |||||
Total long-term financial liabilities | 1,339,933 | 1,390,647 | 1,564,652 | |||||
Total assets | 2,857,832 | 3,054,493 | 3,387,104 | |||||
Long-term debt to long-term debt plus equity ratio | 0.52 | 0.50 | 0.52 |
1 See Non-GAAP Measures section. |
Three months ended | Six months ended | ||||||||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||||||||
Capital expenditures | |||||||||||||||||||||
Upgrade/growth | 4,043 | 48 | nm | 7,595 | 10,013 | (24) | |||||||||||||||
Maintenance | 9,544 | 13,191 | (28) | 16,744 | 29,658 | (44) | |||||||||||||||
Proceeds from disposals of property and equipment | (1,808) | (16,985) | (89) | (2,982) | (21,150) | (86) | |||||||||||||||
Net capital expenditures | 11,779 | (3,746) | nm | 21,357 | 18,521 | 15 |
nm - calculation not meaningful |
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Revenue | |||||||||||||||
31,411 | 17,012 | 85 | 84,967 | 114,149 | (26) | ||||||||||
130,815 | 128,591 | 2 | 246,226 | 343,138 | (28) | ||||||||||
International | 50,080 | 49,156 | 2 | 99,657 | 121,333 | (18) | |||||||||
Total revenue | 212,306 | 194,759 | 9 | 430,850 | 578,620 | (26) | |||||||||
Oilfield services expense | 157,793 | 129,955 | 21 | 317,236 | 412,777 | (23) |
Revenue for the three months ended
The increase in total revenue during the second quarter of 2021 was primarily due to the global economic recovery and improving industry fundamentals following the COVID-19 pandemic. The increases in financial results from the Company's
CANADIAN OILFIELD SERVICES
Revenue increased 85 percent to
Canadian revenue accounted for 15 percent of the Company's total revenue in the second quarter of 2021 (2020 - nine percent) and 20 percent for the first half of 2021 consistent with the prior year. The Company recognized
The Company's Canadian drilling operations recorded 1,058 operating days in the second quarter of 2021, compared to 377 operating days for the second quarter of 2020, an increase of 681 operating days. For the six months ended
The operating and financial results for the Company's Canadian operations for the first six months of 2021, were negatively impacted by the significant effects of the COVID-19 pandemic on the oil and natural gas industry, including supply and demand fundamentals. Beginning in the second quarter of 2021, the Company's Canadian operations began to see an increase in activity due to the economic recovery, post the COVID-19 pandemic severity peak.
During the first half of 2021, the Company moved nine under-utilized drilling rigs into its Canadian operations reserve fleet.
The Company's
The Company's
Drilling rig operating days increased to 2,899 operating days in the second quarter of 2021 from 2,214 operating days in the second quarter of 2020, and 5,480 operating days in the first half of 2021 from 7,355 operating days in the first half of 2020.
Overall operating and financial results for the Company's
During the first half of 2021, the Company acquired one well servicing rig and moved 29 under-utilized drilling rigs into its
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 2021 (2020 - 25 percent) and 23 percent of the Company's revenue in the first six months of 2021 (2020 - 21 percent). There were no standby or contract cancellation fees in the Company's international operating region in the second quarter of 2021 (2020 - US
International operating days for the three months ended
Similar to our North American operations, for the first six months of 2021, international operating and financial results were also negatively impacted by residual COVID-19 pandemic operating conditions. The financial results from the Company's international operations were further negatively impacted on the currency translation, as
During the first half of 2021, the Company moved six under-utilized drilling rigs into its international operations reserve fleet.
DEPRECIATION
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Depreciation | 69,756 | 92,165 | (24) | 140,733 | 181,950 | (23) |
Depreciation expense totaled
GENERAL AND ADMINISTRATIVE
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($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
General and administrative | 8,868 | 10,741 | (17) | 18,071 | 22,545 | (20) | |||||||||
% of revenue | 4.2 | 5.5 | 4.2 | 3.9 | |||||||||||
General and administrative expense decreased seventeen percent to
RESTRUCTURING
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($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Restructuring | — | 6,509 | nm | 3,533 | 7,386 | (52) | |||||||||
nm - calculation not meaningful |
For the six months ended
FOREIGN EXCHANGE AND OTHER LOSS (GAIN)
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Foreign exchange and other loss (gain) | 6,313 | (4,426) | nm | 12,627 | 4,660 | 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.
GAIN ON REPURCHASE OF UNSECURED SENIOR NOTES
Three months ended | Six months ended | |||||||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||
Gain on repurchase of unsecured Senior Notes | (2,139) | (52,023) | (96) | (7,431) | (63,517) | (88) | ||||||||||||||
For the three months ended
For six months ended
INTEREST EXPENSE
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Interest expense | 23,576 | 26,976 | (13) | 47,033 | 58,846 | (20) | |||||||||
Interest expense was incurred on the Company's
Financing charges decreased by
The Company's blended interest rate on its outstanding debt for the 2021 year will be approximately seven percent. The current capital structure primarily consisting of the Credit Facility and the Senior Notes 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.
INCOME TAXES (RECOVERY)
Three months ended | Six months ended | ||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | |||||||||
Current taxes income (recovery) | 476 | (11) | nm | 526 | 449 | 17 | |||||||||
Deferred taxes income (recovery) | (11,428) | (7,431) | 54 | (20,772) | (10,855) | 91 | |||||||||
Total income taxes (recovery) | (10,952) | (7,442) | 47 | (20,246) | (10,406) | 95 | |||||||||
Effective income tax rate (%) | 18.1 | 30.3 | (40) | 17.9 | 18.7 | (4) |
The effective income tax rate for the three months ended June 30, 2021 was 18.1 percent compared to 30.3 percent for the three months ended
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per common share data) | Three months ended | Six months ended | |||||||||||||
2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||
Cash provided by operating activities | 53,185 | 127,432 | (58) | 80,022 | 190,164 | (58) | |||||||||
Funds flow from operations | 41,326 | 26,338 | 57 | 87,853 | 110,833 | (21) | |||||||||
Funds flow from operations per common share | 56 | (21) | |||||||||||||
Working capital 1 | 85,440 | 98,612 | (13) | 85,440 | 98,612 | (13) |
1 Comparative figure as at |
During the three months ended
At
INVESTING ACTIVITIES
Three months ended | Six months ended | |||||||||||||||
($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||
Purchase of property and equipment | (13,587) | (13,239) | 3 | (24,339) | (39,671) | (39) | ||||||||||
Proceeds from disposals of property and equipment | 1,808 | 16,985 | (89) | 2,982 | 21,150 | (86) | ||||||||||
Net change in non-cash working capital | 4,041 | (3,504) | nm | 1,003 | 4,249 | (76) | ||||||||||
Cash used in investing activities | (7,738) | 242 | nm | (20,354) | (14,272) | 43 |
nm - calculation not meaningful |
Net purchases of property and equipment for the second quarter of 2021 totaled
FINANCING ACTIVITIES
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($ thousands) | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||
Proceeds from long-term debt | 29,935 | 41,163 | (27) | 38,531 | 94,289 | (59) | ||||||||||
Repayments of long-term debt | (50,799) | (50,005) | 2 | (66,563) | (105,477) | (37) | ||||||||||
Lease obligation principal repayments | (1,746) | (2,957) | (41) | (3,227) | (5,627) | (43) | ||||||||||
Interest paid | (34,318) | (49,177) | (30) | (49,851) | (61,144) | (18) | ||||||||||
Purchase of common shares held in trust | (224) | 667 | nm | (484) | (556) | (13) | ||||||||||
Cash dividends | — | (9,787) | nm | — | (19,574) | nm | ||||||||||
Cash used in financing activities | (57,152) | (70,096) | (18) | (81,594) | (98,089) | (17) |
nm - calculation not meaningful |
The Company's available bank facilities consist of a
On
- extend the Maturity Date from
January 31, 2022 toMay 1, 2023 ; - increase the interest rate from 7.00% to 7.75% per annum; and
- reduce the Conversion Price from
$7.00 to$1.75 .
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 | ||||
Consolidated EBITDA1 | > 140.0 million | 207,202 | ||
Consolidated EBITDA to Consolidated Interest Expense1,2 | ≥ 1.50 | 2.31 | ||
Consolidated Senior Debt to Consolidated EBITDA1,3 | ≤ 4.00 | 3.78 |
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 and excluding Senior Notes interest in repurchase. |
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 minimum Consolidated EBITDA requirements, 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 and Convertible Debentures, 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 to the Credit Facility, dated
The Senior Notes
The 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 indenture also restricts the 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
NEW BUILDS AND MAJOR RETROFITS
During the first half of 2021, the Company added one well servicing rig to
The Company is currently directing capital expenditures to primarily maintenance capital items and selective upgrades.
OUTLOOK
Industry Overview
The outlook for oilfield services has improved year-over-year as the crude oil and natural gas industry continues to recover from the adverse impact of the COVID-19 pandemic. Rising vaccination rates globally have contributed to circumstances that tend to support the recovery of crude oil demand, resulting in meaningful crude oil inventory declines. Recovering oil demand coupled with OPEC+ nations' moderated crude oil supply have resulted in strong global commodity prices throughout the second quarter of 2021, with the benchmark price of West Texas Intermediate ("WTI") averaging US
We expect vaccine progress and oil demand recovery coupled with a sustained commodity price environment will continue to drive oilfield services activity improvements year-over-year. However, we continue to expect a multi-year recovery cycle for our industry to achieve pre-COVID-19 pandemic activity levels and operating conditions. Particularly in our
Furthermore, short-term uncertainty remains regarding the macroeconomic conditions, including commodity price fluctuations, setbacks in COVID-19 vaccine deployment or vaccine efficacy, the pace of oil demand recovery, and OPEC+ production and supply decisions that may impact the short-term demand for oil field services.
On
The Company remains committed to strategic capital allocation and debt retirement. The Company's budgeted capital expenditures for 2021, excluding the above mentioned Nabors' acquisition, remain at approximately
Canadian Activity
Canadian activity, representing 20 percent of total revenue year to date, declined from the first to the second quarter of 2021 as operations entered seasonal spring break-up. We expect activity to significantly improve in the third quarter as a result of operations exiting seasonal spring break-up, improving industry conditions, and the acquisition of Nabors' 35 land-based drilling rigs.
As of
United States Activity
As of
International Activity
International activity, representing 23 percent of total revenue year to date, remained stable over the second quarter and is expected to modestly improve over the third quarter due to anticipated activity gains in the Australian region. Operations in
As of
RISK AND UNCERTAINTIES
This document contains forward-looking statements based upon current expectations that involve a number of business risks and uncertainties. The factors that could cause results to differ materially include, but are not limited to, the impact of the COVID-19 virus, the potential reinstatement COVID-19 mitigation strategies, such as stay-at-home orders and lockdown related restrictions, virus mutations, economic and market conditions, crude oil and natural gas prices, political events, foreign currency fluctuations, weather conditions, the Company's defense of lawsuits and other claims, and the ability of oil and natural gas companies to pay accounts receivable balances and raise capital or other unforeseen conditions which could ongoing impact on the use of the services supplied by the Company. For a more detailed description of the risk factors and uncertainties that face the Company and the industry in which it operates, refer to the "Risks and Uncertainties" section of our current Management's Discussion & Analysis and the section titled "Risk Factors" in our current Annual Information Form.
CONFERENCE CALL
A conference call will be held to discuss the Company's second quarter 2021 results at
Consolidated Statements of Financial Position
As at | |||||||
(Unaudited - in thousands of Canadian dollars) | |||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 19,532 | $ | 44,198 | |||
Accounts receivable | 162,149 | 164,395 | |||||
Inventories, prepaid and other | 48,359 | 52,679 | |||||
Income taxes receivable | 486 | 290 | |||||
Total current assets | 230,526 | 261,562 | |||||
Property and equipment | 2,471,685 | 2,649,702 | |||||
Deferred income taxes | 155,621 | 143,229 | |||||
Total assets | $ | 2,857,832 | $ | 3,054,493 | |||
Liabilities | |||||||
Current Liabilities | |||||||
Accounts payable and accruals | $ | 129,794 | $ | 146,011 | |||
Share-based compensation | 1,269 | 251 | |||||
Income taxes payable | 8,476 | 8,429 | |||||
Current portion of lease obligation | 5,547 | 8,259 | |||||
Total current liabilities | 145,086 | 162,950 | |||||
Share-based compensation | 8,149 | 2,743 | |||||
Long-term debt | 1,333,369 | 1,384,605 | |||||
Lease obligations | 6,564 | 6,042 | |||||
Deferred income taxes | 117,721 | 128,276 | |||||
Non-controlling interest | 4,736 | 4,853 | |||||
Total liabilities | 1,615,625 | 1,689,469 | |||||
Shareholders' Equity | |||||||
Shareholders' capital | 231,054 | 230,354 | |||||
Contributed surplus | 22,585 | 23,324 | |||||
Equity component of convertible debenture | 2,380 | 3,193 | |||||
Accumulated other comprehensive income | 209,154 | 235,277 | |||||
Retained earnings | 777,034 | 872,876 | |||||
Total shareholders' equity | 1,242,207 | 1,365,024 | |||||
Total liabilities and shareholders' equity | $ | 2,857,832 | $ | 3,054,493 |
Consolidated Statements of Loss
Three months ended | Six months ended | ||||||||||||||
(Unaudited - in thousands of Canadian dollars, except per common share data) | |||||||||||||||
Revenue | $ | 212,306 | $ | 194,759 | $ | 430,850 | $ | 578,620 | |||||||
Expenses | |||||||||||||||
Oilfield services | 157,793 | 129,955 | 317,236 | 412,777 | |||||||||||
Depreciation | 69,756 | 92,165 | 140,733 | 181,950 | |||||||||||
General and administrative | 8,868 | 10,741 | 18,071 | 22,545 | |||||||||||
Restructuring | — | 6,509 | 3,533 | 7,386 | |||||||||||
Share-based compensation | 5,820 | 2,879 | 6,822 | (1,621) | |||||||||||
Foreign exchange and other loss (gain) | 6,313 | (4,426) | 12,627 | 4,660 | |||||||||||
Total expenses | 248,550 | 237,823 | 499,022 | 627,697 | |||||||||||
Loss before interest expense, accretion of deferred financing charges and other (gains) losses and income taxes | (36,244) | (43,064) | (68,172) | (49,077) | |||||||||||
Loss from investment in joint ventures | — | 127 | — | 1,785 | |||||||||||
Gain on repurchase of unsecured Senior Notes | (2,139) | (52,023) | (7,431) | (63,517) | |||||||||||
Loss on asset sale | — | 3,437 | — | 3,437 | |||||||||||
Interest expense | 23,576 | 26,976 | 47,033 | 58,846 | |||||||||||
Accretion of deferred financing charges | 2,704 | 2,971 | 5,407 | 5,943 | |||||||||||
Loss before income taxes | (60,385) | (24,552) | (113,181) | (55,571) | |||||||||||
Income taxes (recovery) | |||||||||||||||
Current income taxes (recovery) | 476 | (11) | 526 | 449 | |||||||||||
Deferred income taxes (recovery) | (11,428) | (7,431) | (20,772) | (10,855) | |||||||||||
Total income tax recovery | (10,952) | (7,442) | (20,246) | (10,406) | |||||||||||
Net loss from continuing operations | (49,433) | (17,110) | (92,935) | (45,165) | |||||||||||
Loss from discontinued operations | (2,899) | (127) | (2,899) | (1,254) | |||||||||||
Net loss | $ | (52,332) | $ | (17,237) | $ | (95,834) | $ | (46,419) | |||||||
Net loss attributable to: | |||||||||||||||
Common shareholders | (52,292) | (17,077) | (95,842) | (46,327) | |||||||||||
Non-controlling interests | (40) | (160) | 8 | (92) | |||||||||||
(52,332) | (17,237) | (95,834) | (46,419) | ||||||||||||
Net loss attributable to common shareholders per common share | |||||||||||||||
Basic | $ | (0.32) | $ | (0.10) | $ | (0.59) | $ | (0.28) | |||||||
Diluted | $ | (0.32) | $ | (0.10) | $ | (0.59) | $ | (0.28) |
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 | $ | (52,332) | $ | (17,237) | $ | (95,834) | $ | (46,419) | |||||||
Items not affecting cash | |||||||||||||||
Depreciation | 69,756 | 92,165 | 140,733 | 181,950 | |||||||||||
Loss from investment in joint ventures | — | 127 | — | 1,785 | |||||||||||
Loss on asset sale | — | 3,437 | — | 3,437 | |||||||||||
Gain on purchase of unsecured Senior Notes | (2,139) | (52,023) | (7,431) | (63,517) | |||||||||||
Share-based compensation | 5,820 | 2,879 | 6,822 | (1,621) | |||||||||||
Unrealized foreign exchange and other | 5,369 | (25,526) | 11,895 | (18,716) | |||||||||||
Accretion of deferred financing charges | 2,704 | 2,971 | 5,407 | 5,943 | |||||||||||
Interest expense | 23,576 | 26,976 | 47,033 | 58,846 | |||||||||||
Deferred income taxes recovery | (11,428) | (7,431) | (20,772) | (10,855) | |||||||||||
Funds flow from operations | 41,326 | 26,338 | 87,853 | 110,833 | |||||||||||
Net change in non-cash working capital | 11,859 | 101,094 | (7,831) | 79,331 | |||||||||||
Cash provided by operating activities | 53,185 | 127,432 | 80,022 | 190,164 | |||||||||||
Investing activities | |||||||||||||||
Purchase of property and equipment | (13,587) | (13,239) | (24,339) | (39,671) | |||||||||||
Proceeds from disposals of property and equipment | 1,808 | 16,985 | 2,982 | 21,150 | |||||||||||
Net change in non-cash working capital | 4,041 | (3,504) | 1,003 | 4,249 | |||||||||||
Cash (used in) provided by investing activities | (7,738) | 242 | (20,354) | (14,272) | |||||||||||
Financing activities | |||||||||||||||
Proceeds from long-term debt | 29,935 | 41,163 | 38,531 | 94,289 | |||||||||||
Repayments of long-term debt | (50,799) | (50,005) | (66,563) | (105,477) | |||||||||||
Lease obligation principle repayments | (1,746) | (2,957) | (3,227) | (5,627) | |||||||||||
Interest paid | (34,318) | (49,177) | (49,851) | (61,144) | |||||||||||
Purchase of common shares held in trust | (224) | 667 | (484) | (556) | |||||||||||
Cash dividends | — | (9,787) | — | (19,574) | |||||||||||
Cash used in financing activities | (57,152) | (70,096) | (81,594) | (98,089) | |||||||||||
Net (decrease) increase in cash | (11,705) | 57,578 | (21,926) | 77,803 | |||||||||||
Effects of foreign exchange on cash | (2,179) | (3,483) | (2,740) | (3,556) | |||||||||||
Cash – beginning of period | 33,416 | 48,560 | 44,198 | 28,408 | |||||||||||
Cash – end of period | $ | 19,532 | $ | 102,655 | $ | 19,532 | $ | 102,655 |
Non-GAAP Measures
Adjusted EBITDA, 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. The non-GAAP measures included in this press 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 principle 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, restructuring costs, gain on repurchase of unsecured Senior Notes 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) | 2021 | 2020 | 2021 | 2020 | |||||||||
Loss before income taxes | (60,385) | (24,552) | (113,181) | (55,571) | |||||||||
Add-back/(deduct): | |||||||||||||
Interest expense | 23,576 | 26,976 | 47,033 | 58,846 | |||||||||
Accretion of deferred financing charges | 2,704 | 2,971 | 5,407 | 5,943 | |||||||||
Depreciation | 69,756 | 92,165 | 140,733 | 181,950 | |||||||||
Restructuring | — | 6,509 | 3,533 | 7,386 | |||||||||
Loss from investment in joint ventures | — | 127 | — | 1,785 | |||||||||
Share-based compensation | 5,820 | 2,879 | 6,822 | (1,621) | |||||||||
Loss on asset sale | — | 3,437 | — | 3,437 | |||||||||
Gain on repurchase of unsecured Senior Notes 1 | (2,139) | (52,023) | (7,431) | (63,517) | |||||||||
Foreign exchange and other loss (gain) | 6,313 | (4,426) | 12,627 | 4,660 | |||||||||
Adjusted EBITDA from investment in joint ventures | — | 3,997 | — | 6,009 | |||||||||
Adjusted EBITDA | 45,645 | 58,060 | 95,543 | 149,307 |
1 See "Interest Expense" section for definition of Senior Notes. |
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 in this document 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" 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 throughout this document, including, but not limited to, information provided in the "Funds Flow from
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 oil prices may pressure customers into reducing or limiting their drilling budgets; the status of current negotiations with the Company's customers and vendors; customer focus on safety performance; existing term contracts are neither renewed nor terminated prematurely; the Company's ability to provide services on a timely basis; successful integration of acquisitions; and the general stability of the economic and political environments in the jurisdictions where we operate.
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 crude oil and natural gas commodity prices; fluctuations in currency and interest rates; 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; determinations by
Although the Company believes the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date such forward-looking statements are made, no assurances can be given as to future results, levels of activity and achievements. Readers are cautioned that the lists of important factors contained herein are not exhaustive. Unpredictable or unknown factors not discussed in this MD&A could also have material adverse effects on forward-looking statements and the Company's results from operations. Further additional information on the risk factors that could affect the Company's business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to the Company's Annual Information Form for the year ended
The forward-looking statements contained in this MD&A 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
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