FIRST QUARTER HIGHLIGHTS
- Revenue for the first quarter of 2021 was
$218.5 million , a 43 percent decrease from the first quarter of 2020 revenue of$383.9 million . - Revenue by geographic area:
Canada -$53.6 million , 24 percent of total;United States -$115.4 million , 53 percent of total; and- International -
$49.6 million , 23 percent of total. - Canadian drilling recorded 1,846 operating days in the first quarter of 2021, a 40 percent decrease from 3,102 operating days in the first quarter of 2020. Canadian well servicing recorded 9,090 operating hours in the first quarter of 2021, a 26 percent decrease from 12,233 operating hours in the first quarter of 2020.
United States drilling recorded 2,581 operating days in the first quarter of 2021, a 50 percent decrease from 5,141 operating days in the first quarter of 2020.United States well servicing recorded 29,965 operating hours in the first quarter of 2021, a four percent decrease from 31,207 operating hours in the first quarter of 2020.- International drilling recorded 859 operating days in the first quarter of 2021, a 40 percent decrease from 1,438 operating days recorded in first quarter of 2020.
- Adjusted EBITDA for the first quarter of 2021 was
$49.9 million , a 45 percent decrease from Adjusted EBITDA of$91.2 million for the first quarter of 2020. - Funds flow from operations for the first quarter of 2021 decreased 45 percent to
$46.5 million from$84.5 million in first quarter of the prior year. - During the first quarter of 2021, the Company received a
$4.7 million (2020 - $ nil)Canada Emergency Wage Subsidy ("CEWS") from theGovernment of Canada . The wage subsidy received partially offset the decrease in Adjusted EBITDA and net loss attributable to common shareholders. - Net capital expenditures for the quarter were
$9.6 million , consisting of$3.6 million in upgrade capital and$7.2 million in maintenance capital, offset by proceeds from dispositions of$1.2 million . Capital expenditures for the 2021 year are targeted to be approximately$50.0 million . - During the first quarter of 2021, the Company recognized
$6.0 million of standby revenue and$1.2 million of contract cancellation or early termination fees. - General and administrative expense decreased 22 percent year over year and quarter over quarter.
- Over the first quarter of 2021, US
$16.6 million face value of Senior Notes were repurchased by the Company in the open market for cancellation, recognizing a gain of$5.3 million . - Total debt for the first quarter of 2021 decreased by
$20.9 million to$1,363.7 million as ofMarch 31, 2021 from$1,384.6 million as atDecember 31, 2020 . - On
March 29, 2021 the Company amended and extended the existing$37,000 subordinate convertible debentures toMay 1, 2023 . The amendments include an increase to the interest rate and a reduction the Conversion Price. - The Company announces that
Michael Gray has decided to remain with the Company and will remain with the Company as Chief Financial Officer.
OVERVIEW
Revenue for the three months ended
Net loss attributable to common shareholders for the three months ended
During the first quarter of 2021, the Company received a
Funds flow from operations decreased 45 percent to
In March of 2020, the
Over the course of 2020 and into 2021, nations responded to COVID-19 cases and hospitalizations with varying degrees of easing or tightening of COVID-19 restrictions. The commencement of COVID-19 vaccine distribution resulted in easing COVID-19 restrictions among certain nations and aided the recovery of crude oil and natural gas demand. Furthermore, OPEC+ nations managed crude oil supply in addition to other producer led production curtailments have contributed to stabilization of commodity prices.
While industry fundamentals have improved, macro-economic conditions and industry operating conditions are expected to continue to recover from the significant fall-out of the COVID-19 pandemic. As a result, the Company's operating and financial results continue to be impacted by and are recovering 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 pathway 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 implemented rigorous measures across its global operations to protect the safety of its operations, the health of its employees and the continuity of its business. Across the Company's global operations, these proactive measures have facilitated the safe continuity and reliability of its operations. Many of these measures continue to be in place, and will be adapted or modified as needed, as the Company continues to monitor local government recommendations and public health guidelines, prioritizing the health and safety of its workforce.
The Company's operating days were lower in the first quarter of 2021 when compared to the first quarter of 2020 as operations were significantly and negatively impacted by the 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 | ||||||||||
2021 | 2020 | % change | ||||||||
Revenue 1 | 218,544 | 383,861 | (43) | |||||||
Adjusted EBITDA 1, 2 | 49,898 | 91,247 | (45) | |||||||
Adjusted EBITDA per common share 1, 2 | ||||||||||
Basic | $ | 0.31 | $ | 0.56 | (45) | |||||
Diluted | $ | 0.31 | $ | 0.56 | (45) | |||||
Net loss attributable to common shareholders | (43,550) | (29,250) | (49) | |||||||
Net loss attributable to common shareholders per common share | ||||||||||
Basic | $ | (0.27) | $ | (0.18) | (50) | |||||
Diluted | $ | (0.27) | $ | (0.18) | (50) | |||||
Cash provided by operating activities | 57,430 | 62,732 | (8) | |||||||
Funds flow from operations | 84,495 | 120,420 | (45) | |||||||
Funds flow from operations per common share | ||||||||||
Basic | $ | 0.52 | $ | 0.77 | (44) | |||||
Diluted | $ | 0.52 | $ | 0.77 | (44) | |||||
Total long term debt | 1,363,732 | 1,643,595 | (17) | |||||||
Weighted average common shares - basic (000s) | 162,295 | 162,843 | — | |||||||
Weighted average common shares - diluted (000s) | 162,582 | 162,981 | — | |||||||
Drilling | 2021 | 2020 | % change | |||||||
Number of marketed rigs 3 | ||||||||||
Canada 4 | 92 | 101 | (9) | |||||||
United States | 93 | 122 | (24) | |||||||
International 5 | 42 | 43 | (2) | |||||||
Total | 227 | 266 | (15) | |||||||
Operating days 6 | ||||||||||
Canada 4 | 1,846 | 3,102 | (40) | |||||||
United States | 2,581 | 5,141 | (50) | |||||||
International 5 | 859 | 1,438 | (40) | |||||||
Total | 5,286 | 9,681 | (45) | |||||||
Well Servicing | 2021 | 2020 | % change | |||||||
Number of rigs | ||||||||||
Canada | 52 | 52 | — | |||||||
United States | 47 | 47 | — | |||||||
Total | 99 | 99 | — | |||||||
Operating hours | ||||||||||
Canada | 9,090 | 12,233 | (26) | |||||||
United States | 29,965 | 31,207 | (4) | |||||||
Total | 39,055 | 43,440 | (10) |
1. | Comparative revenue, Adjusted EBITDA and Adjusted EBITDA per common share have been revised to conform with current year's presentation. |
2. | Please refer to Adjusted EBITDA calculation in Non-GAAP Measures. |
3. | Total owned rigs: |
4. | Excludes coring rigs. |
5. | Includes workover rigs. |
6. | Defined as contract drilling days, between spud to rig release. |
FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS
As at ($ thousands) |
|
|
| |||||
Working capital1 | 101,717 | 147,353 | 98,612 | |||||
Cash | 33,416 | 48,560 | 44,198 | |||||
Long-term debt | 1,363,732 | 1,643,595 | 1,384,605 | |||||
Total long-term financial liabilities | 1,369,612 | 1,651,477 | 1,390,647 | |||||
Total assets | 2,966,277 | 3,640,761 | 3,054,493 | |||||
Long-term debt to long-term debt plus equity ratio | 0.51 | 0.52 | 0.50 |
1 See Non-GAAP Measures section. |
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Capital expenditures | ||||||||
Upgrade/growth | 3,552 | 9,965 | (64) | |||||
Maintenance | 7,200 | 16,467 | (56) | |||||
Proceeds from disposals of property and equipment | (1,174) | (4,165) | (72) | |||||
Net capital expenditures | 9,578 | 22,267 | (57) |
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended | |||||||
($ thousands) | 2021 | 2020 | % change | ||||
Revenue | |||||||
Canada | 53,556 | 97,137 | (45) | ||||
United States 1 | 115,411 | 214,547 | (46) | ||||
International | 49,577 | 72,177 | (31) | ||||
Total revenue 1 | 218,544 | 383,861 | (43) | ||||
Oilfield services expense 1 | 159,443 | 282,822 | (44) |
1 Comparative revenue and oilfield services expense have been revised to conform with current year's presentation. |
Revenue for the three months ended
The decrease in total revenue during the first quarter of 2021, was primarily due to the significant impact of the COVID-19 pandemic on the oil and natural gas industry. The fallout from the pandemic led to a drop in demand, further challenging an already over-supplied commodity market. The steep declines in demand and continued oversupply resulted in an activity slowdown for oilfield services. The financial results from the Company's
CANADIAN OILFIELD SERVICES
The Company recorded revenue of
The operating and financial results for the Company's Canadian operations were significantly and negatively impacted during the first quarter of 2021 due to decreased demand for crude oil and increased market supply.
For the three months ended
During the first quarter of 2021, the Company moved nine under-utilized drilling rigs into its Canadian operations reserve fleet.
During the three months ended
Drilling days decreased by 50 percent to 2,581 drilling days in the first quarter of 2020 from 5,141 drilling days in the first quarter of 2020. Well servicing hours decreased by four percent in the first quarter of 2021 to 29,965 operating hours from 31,207 operating hours in the first quarter of 2020.
Overall operating and financial results for the Company's
During the first quarter of 2021, the Company moved 29 under-utilized drilling rigs into its the United Stated reserve fleet.
INTERNATIONAL OILFIELD SERVICES
The Company's international operations recorded revenue of
For the three months ended
Similar to our North American operations, international operating and financial results were also negatively impacted by industry operating conditions. The financial results from the Company's international operations were further negatively impacted on the currency translation, as
During the first quarter of 2021, the Company moved six under-utilized drilling rigs into its international operations reserve fleet.
DEPRECIATION
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Depreciation | 70,977 | 89,785 | (21) |
Depreciation totaled
GENERAL AND ADMINISTRATIVE
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
General and administrative | 9,203 | 11,804 | (22) | |||||
% of revenue | 4.2 | 3.1 |
General and administrative expenses decreased 22 percent to
RESTRUCTURING
Three months ended | |||||
($ thousands) | 2021 | 2020 | % change | ||
Restructuring | 3,533 | 877 | nm |
nm - calculation not meaningful |
Restructuring expense totaled $3.5 million for the first quarter of 2021 (2020 -
FOREIGN EXCHANGE LOSS AND OTHER
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Foreign exchange loss and other | 6,314 | 9,086 | (31) |
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 | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Gain on repurchase of Senior Notes | (5,292) | (11,494) | (54) | |||||
For the three months ended
Subsequent to
INTEREST EXPENSE
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Interest expense | 23,457 | 31,870 | (26) |
Interest expense was incurred on the Company's
Interest expense decreased by
The Company's blended interest rate on its outstanding debt for the 2021 year will be approximately 7.4 percent. The current capital structure 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 | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Current income tax | 50 | 460 | (89) | |||||
Deferred income tax recovery | (9,344) | (3,424) | nm | |||||
Total income tax recovery | (9,294) | (2,964) | nm | |||||
Effective income tax rate (%) | 17.6 | 9.2 |
nm - calculation not meaningful |
The effective income tax rate for the three months ended March 31, 2021 was 17.6 percent compared with 9.2 percent for the three months ended
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per common share amounts) | Three months ended | |||||||||
2021 | 2020 | % change | ||||||||
Cash provided by operating activities | 57,430 | 62,732 | (8) | |||||||
Funds flow from operations | 46,527 | 84,495 | (45) | |||||||
Funds flow from operations per common share | $ | 0.29 | $ | 0.52 | (44) | |||||
Working capital 1 | 101,717 | 98,612 | 3 |
1 Comparative figure as of |
For the three months ended
As at
INVESTING ACTIVITIES
Three months ended | ||||||||
($ thousands) | 2021 | 2020 | % change | |||||
Purchase of property and equipment | (10,752) | (26,432) | (59) | |||||
Proceeds from disposals of property and equipment | 1,174 | 4,165 | (72) | |||||
Net change in non-cash working capital | (33,631) | 7,753 | nm | |||||
Cash used in investing activities | (43,209) | (14,514) | nm |
nm - calculation not meaningful |
Net purchases of property and equipment for the first quarter of 2021 totaled
FINANCING ACTIVITIES
Three months ended | |||||||
($ thousands) | 2021 | 2020 | % change | ||||
Proceeds from long-term debt | 8,596 | 53,126 | (84) | ||||
Repayments of long-term debt | (15,764) | (55,472) | (72) | ||||
Lease obligation principle repayments | (1,481) | (2,670) | (45) | ||||
Purchase of common shares held in trust | (260) | (1,223) | (79) | ||||
Interest paid | (15,533) | (11,967) | 30 | ||||
Cash dividends | — | (9,787) | nm | ||||
Cash used in financing activities | (24,442) | (27,993) | (13) |
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 | 215,620 | |||
Consolidated EBITDA to Consolidated Interest Expense1,2 | ≥ 1.50 | 2.32 | |||
Consolidated Senior Debt to Consolidated EBITDA1,3 | ≤ 4.00 | 3.63 |
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 at
NEW BUILDS AND MAJOR RETROFITS
As at
The Company is currently directing capital expenditures to primarily maintenance capital items and selective upgrades.
OUTLOOK
Industry Overview
The outlook for oilfield services continues to improve as industry fundamentals continue to recover from the fall out of the COVID-19 pandemic. While easing supply curtailments, OPEC+ nations continue to moderate oil supply supporting global commodity prices through the first quarter of 2021. The benchmark price of West Texas Intermediate ("WTI") averaged US
We expect vaccine distribution to progress and oil demand recovery, coupled with an improved and a sustained commodity price environment, will likely drive activity improvements year-over-year. We expect steady increases to activity, as oil and natural gas producers moderate capital spending, remaining committed to cash generation, and maintaining current production levels. We expect producers to modestly revisit drilling programs through 2021 as legacy wells decline in production, demand recovery continues to stabilize, and global crude oil inventories continue to decline.
We expect a multi-year recovery cycle for our industry to pre-COVID-19 activity levels and operating conditions, as global economies continue to recover from the fall out of the pandemic. Furthermore, there remains a degree of short-term uncertainty regarding macroeconomic conditions, including commodity price fluctuations, severity of COVID-19 mitigation efforts, setbacks to vaccine deployment and efficacy, virus mutations, the pace of oil demand recovery, and OPEC+ production and supply decisions that may impact the short-term demand for oil field services.
The Company remains committed to conservative capital allocation, balance sheet preservation, and debt retirement. The Company has budgeted capital expenditures for 2021 of approximately
Canadian Activity
Canadian activity, currently representing 24 percent of our business, ramped up through the first quarter of 2021 over the winter drilling season. Exiting the first quarter, Canadian activity has predictably slowed as operations entered the seasonal spring break-up. We expect activity over the second quarter of 2021 to improve year-over-year and activity to further increase as we exit spring break-up and enter the third quarter of 2021.
As of
United States Activity
As of
International Activity
International activity, currently representing 23 percent of our business, remained steady throughout the first quarter of 2021. We expect international activity to remain steady through the second quarter and improve through the latter half of 2021. Operations in
As of
RISKS 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 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 first quarter 2021 results at
Consolidated Statements of Financial Position
As at |
|
| |||||
(Unaudited - in thousands of Canadian dollars) | |||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 33,416 | $ | 44,198 | |||
Accounts receivable | 176,819 | 164,395 | |||||
Inventories, prepaid and other | 50,935 | 52,679 | |||||
Income taxes receivable | 286 | 290 | |||||
Total current assets | 261,456 | 261,562 | |||||
Property and equipment | 2,557,939 | 2,649,702 | |||||
Deferred income taxes | $ | 146,882 | $ | 143,229 | |||
Total assets | $ | 2,966,277 | $ | 3,054,493 | |||
Liabilities | |||||||
Current Liabilities | |||||||
Accounts payable and accruals | $ | 143,464 | $ | 146,011 | |||
Share-based compensation | 366 | 251 | |||||
Income taxes payable | 8,616 | 8,429 | |||||
Current portion of lease obligations | 7,293 | 8,259 | |||||
Total current liabilities | 159,739 | 162,950 | |||||
Share-based compensation | 2,982 | 2,743 | |||||
Long-term debt | 1,363,732 | 1,384,605 | |||||
Lease obligations | 5,880 | 6,042 | |||||
Deferred income taxes | 121,495 | 128,276 | |||||
Non-controlling interest | 4,835 | 4,853 | |||||
Total liabilities | $ | 1,658,663 | $ | 1,689,469 | |||
Shareholders' Equity | |||||||
Shareholders' capital | $ | 231,278 | $ | 230,354 | |||
Contributed surplus | 22,793 | 23,324 | |||||
Equity component of subordinate convertible debenture | 2,380 | 3,193 | |||||
Accumulated other comprehensive income | 221,837 | 235,277 | |||||
Retained earnings | 829,326 | 872,876 | |||||
Total shareholders' equity | 1,307,614 | 1,365,024 | |||||
Total liabilities and shareholders' equity | $ | 2,966,277 | $ | 3,054,493 |
Consolidated Statements of Loss
Three months ended | |||||||
|
| ||||||
(Unaudited - in thousands of Canadian dollars, except per common share data) | |||||||
Revenue 1 | $ | 218,544 | $ | 383,861 | |||
Expenses | |||||||
Oilfield services 1 | 159,443 | 282,822 | |||||
Depreciation | 70,977 | 89,785 | |||||
General and administrative | 9,203 | 11,804 | |||||
Restructuring | 3,533 | 877 | |||||
Share-based compensation | 1,002 | (4,500) | |||||
Foreign exchange loss and other | 6,314 | 9,086 | |||||
Total expenses | 250,472 | 389,874 | |||||
Loss before interest expense, accretion of deferred financing charges and other (gains) losses and income taxes | (31,928) | (6,013) | |||||
Loss from investment in joint ventures | — | 1,658 | |||||
Gain on repurchase of unsecured Senior Notes | (5,292) | (11,494) | |||||
Interest expense | 23,457 | 31,870 | |||||
Accretion of deferred financing charges | 2,703 | 2,972 | |||||
Loss before income taxes | (52,796) | (31,019) | |||||
Income tax (recovery) | |||||||
Current income tax | 50 | 460 | |||||
Deferred income tax recovery | (9,344) | (3,424) | |||||
Total income tax recovery | (9,294) | (2,964) | |||||
Net loss from continuing operations | $ | (43,502) | $ | (28,055) | |||
Loss from discontinued operations | — | (1,127) | |||||
Net loss | (43,502) | (29,182) | |||||
Net (loss) income attributable to: | |||||||
Common shareholders | (43,550) | (29,250) | |||||
Non-controlling interests | 48 | 68 | |||||
(43,502) | (29,182) | ||||||
Net loss attributable to common shareholders per common share | |||||||
Basic | $ | (0.27) | $ | (0.18) | |||
Diluted | $ | (0.27) | $ | (0.18) |
1 Comparative revenue and oilfield services expense have been revised to conform with current year's presentation. |
Consolidated Statements of Cash Flows
Three months ended | |||||||
|
| ||||||
(Unaudited - in thousands of Canadian dollars) | |||||||
Cash provided by (used in) | |||||||
Operating activities | |||||||
Net loss | $ | (43,502) | $ | (29,182) | |||
Items not affecting cash | |||||||
Depreciation | 70,977 | 89,785 | |||||
Loss from investment in joint ventures | — | 1,658 | |||||
Gain on repurchase of unsecured Senior Notes | (5,292) | 11,494 | |||||
Share-based compensation | 1,002 | (4,500) | |||||
Unrealized foreign exchange and other loss | 6,526 | 6,810 | |||||
Accretion of deferred financing charges | 2,703 | 2,972 | |||||
Interest expense | 23,457 | 31,870 | |||||
Deferred income tax recovery | (9,344) | (3,424) | |||||
Funds flow from operations | 46,527 | 84,495 | |||||
Net change in non-cash working capital | 10,903 | (21,763) | |||||
Cash provided by operating activities | 57,430 | 62,732 | |||||
Investing activities | |||||||
Purchase of property and equipment | (10,752) | (26,432) | |||||
Proceeds from disposals of property and equipment | 1,174 | 4,165 | |||||
Net change in non-cash working capital | (33,631) | 7,753 | |||||
Cash used in investing activities | (43,209) | (14,514) | |||||
Financing activities | |||||||
Proceeds from long-term debt | 8,596 | 53,126 | |||||
Repayments of long-term debt | (15,764) | (55,472) | |||||
Lease obligations principal repayments | (1,481) | (2,670) | |||||
Purchase of common shares held in trust | (260) | (1,223) | |||||
Interest paid | (15,533) | (11,967) | |||||
Cash dividends | — | (9,787) | |||||
Cash used in financing activities | (24,442) | (27,993) | |||||
Net (decrease) increase in cash | (10,221) | 20,225 | |||||
Effects of foreign exchange on cash | (561) | (73) | |||||
Cash | |||||||
Beginning of period | 44,198 | 28,408 | |||||
End of period | $ | 33,416 | $ | 48,560 |
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.
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 payment 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 | ||||||
($ thousands) | 2021 | 2020 | |||||
Loss before income taxes 1 | $ | (52,796) | $ | (31,019) | |||
Add-back/(deduct): | |||||||
Interest expense | 23,457 | 31,870 | |||||
Accretion of deferred financing charges | 2,703 | $ | 2,972 | ||||
Depreciation | 70,977 | 89,785 | |||||
Restructuring costs | 3,533 | 877 | |||||
Share-based compensation | 1,002 | (4,500) | |||||
Gain on repurchase of unsecured Senior Notes | (5,292) | (11,494) | |||||
Loss from investment in joint ventures | — | 1,658 | |||||
Foreign exchange loss and other | 6,314 | 9,086 | |||||
Adjusted EBITDA from investment in joint ventures | — | 2,012 | |||||
Adjusted EBITDA | $ | 49,898 | $ | 91,247 |
1 Comparative loss before income taxes have been revised to conform with current year's presentation. |
Working Capital
Working capital 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 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. They 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; the Company's defence of lawsuits and other claims; availability and cost of labour and other equipment, supplies and services; the Company's ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company's oilfield services equipment; availability and cost of financing and insurance; the Company's ability to amend covenants under the Credit Facility with its Credit Facility syndicate; timing and success of integrating the business and operations of acquired companies; actions by governmental authorities; government regulations and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); the adequacy of the Company's provision for taxes; the Company's response to the global COVID-19 pandemic and the impact thereof upon the business environments in which the Company is or may become engaged; and other circumstances affecting the Company's business, revenues and expenses.
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, the global COVID-19 pandemic, the potential reinstatement COVID-19 mitigation strategies, such as stay-at-home orders and lockdown related restrictions, and the impact thereof upon the Company, its customers and its business. Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results 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.
For additional information refer to the "Risk and Uncertainties" section of the MD&A. Readers are cautioned that the lists of important factors contained herein are not exhaustive. Unpredictable or unknown factors not discussed in the MD&A could also have material adverse effects on forward-looking statements.
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. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or its projections, anticipations, estimates or opinions change.
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