2022 HIGHLIGHTS
- Revenue for 2022 was
$1,577.3 million , a 58 percent increase from 2021 revenue of$995.6 million . - Revenue amounts and percentage of total by geographic area:
Canada -$435.0 million , 28 percent;United States -$892.1 million , 56 percent; and- International -
$250.3 million , 16 percent. - Canadian drilling recorded 13,589 operating days in 2022, a 51 percent increase from 8,979 operating days in 2021. Canadian well servicing recorded 47,269 operating hours in 2022, a 30 percent increase from 36,254 operating hours in 2021.
United States drilling recorded 17,928 operating days in 2022, a 46 percent increase from 12,242 operating days in 2021.United States well servicing recorded 124,035 operating hours in 2022, a one percent decrease from the 124,916 operating hours in 2021.- International drilling recorded 3,973 operating days in 2022, an 11 percent increase from 3,574 operating days recorded in 2021.
- Adjusted EBITDA for 2022 was
$373.6 million , a 75 percent increase from Adjusted EBITDA of$213.2 million for 2021. - Funds flow from operations for 2022 increased 95 percent to
$372.0 million from$190.7 million in the prior year. - During 2022, the Company did not recognize any
Canada Emergency Wage Subsidy program payments as compared with$16.0 million recognized in 2021. - Net capital expenditures for the calendar year 2022 totaled
$126.8 million , consisting of$68.8 million in upgrade capital,$105.6 million in maintenance capital, offset by proceeds of$47.5 million from equipment disposals. Within the upgrade and growth capital, two drilling rigs were reactivated inOman in the fourth quarter of 2022, and a third rig inOman will be reactivated in the first half of 2023. In addition, as atDecember 31, 2022 , 31 drilling rigs have been reactivated and upgraded during 2022. Capital expenditures for the calendar year 2023 are targeted to be approximately$157.0 million , primarily related to maintenance expenditures and selective growth projects. In addition, the Company may consider additional upgrade or growth projects in response to customer demand and appropriate contract terms. - Long-term debt, net of cash, was reduced by
$50.9 million sinceDecember 31, 2021 . Our debt reduction for 2023 is targeted to be approximately$200.0 million . Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately$600.0 million . If industry conditions change, this target could be increased or decreased. - General and administrative expense increased 27 percent to
$48.6 million (3.1 percent of revenue) for year-ended 2022 from$38.2 million (3.8 percent of revenue) for year-ended 2021. - On
June 7, 2022 , the Company settled its Convertible Debentures of$37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of$1.75 . - During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of
$5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price was satisfied through the issuance of 7,017,988 common shares of Cathedral to the Company. As part of the transaction, Cathedral and the Company have entered into a marketing and technology alliance which will further help support and expand the customer base of both companies in the Canadian market. - Due to the strong financial performance of the Company in 2022, the annual bonus and performance share unit payments to employees and management of the Company was capped at 5% of 2022 EBITDA, in accordance with the Company's compensation plan. The Company believes that this level of payments provides incentive to employees and management to achieve strong financial performance while at the same time providing shareholders with returns on their investment.
OVERVIEW
Revenue for the year ended
Net income attributed to common shareholders for the year ended
During 2022, the Company did not recognize any
During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of
The Company's operating days were higher in 2022, as compared with 2021, as a result of supportive industry conditions driving activity improvements year-over-year.
The outlook for oilfield services continues to be positive reflecting year-over-year increases in oilfield services demand and activity. Global inflationary concerns have continued to prompt central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have subsequently led to uncertainty for global economies regarding recession risk and contracting economic growth. These factors continue to impact global energy commodity prices and add uncertainty to the macro-economic outlook over the short-term.
However, despite a potential economic slowdown in select major economies, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and respond to market conditions. Moderate crude oil supply, coupled with positive commodity prices, have resulted in increased demand for oilfield services, driving both improved activity and drilling rig rates in the Company's North American segments year-over-year.
Over the near term, there remains uncertainty regarding the impacts of ongoing hostilities in
The Company exited 2022 with a working capital deficit of
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 share data and operating information)
Three months ended | Twelve months ended | ||||||||||
2022 | 2021 | % change | 2022 | 2021 | % change | ||||||
Revenue | 467,980 | 296,166 | 58 | 1,577,329 | 995,594 | 58 | |||||
Adjusted EBITDA 1 | 129,963 | 57,861 | nm | 373,618 | 213,173 | 75 | |||||
Adjusted EBITDA per common share 1 | |||||||||||
Basic | $ 0.76 | $ 0.35 | nm | $ 2.13 | $ 1.31 | 63 | |||||
Diluted | $ 0.76 | $ 0.36 | nm | $ 2.12 | $ 1.31 | 62 | |||||
Net (loss) income attributable to common shareholders | 11,897 | (29,235) | nm | 8,128 | (159,475) | nm | |||||
Net (loss) income attributable to common shareholders per common share | |||||||||||
Basic | $ 0.07 | $ (0.18) | nm | $ 0.05 | $ (0.98) | nm | |||||
Diluted | $ 0.07 | $ (0.18) | nm | $ 0.05 | $ (0.98) | nm | |||||
Cash provided by operating activities | 121,497 | 39,221 | nm | 319,962 | 178,642 | 79 | |||||
Funds flow from operations | 110,361 | 46,644 | nm | 371,956 | 190,695 | 95 | |||||
Funds flow from operations per common share | |||||||||||
Basic | $ 0.65 | $ 0.28 | nm | $ 2.12 | $ 1.17 | 81 | |||||
Diluted | $ 0.65 | $ 0.29 | nm | $ 2.11 | $ 1.17 | 80 | |||||
Long-term debt, net of cash 2 | 507,009 | 1,440,579 | (65) | 507,009 | 1,440,579 | (65) | |||||
Weighted average common shares - basic (000s) | 183,574 | 162,385 | 13 | 175,578 | 162,541 | 8 | |||||
Weighted average common shares - diluted (000s) | 184,652 | 163,454 | 13 | 176,430 | 163,195 | 8 | |||||
Drilling | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Number of marketed rigs 3 | |||||||||||
123 | 127 | (3) | 123 | 127 | (3) | ||||||
89 | 93 | (4) | 89 | 93 | (4) | ||||||
International 5 | 34 | 42 | (19) | 34 | 42 | (19) | |||||
Total | 246 | 262 | (6) | 246 | 262 | (6) | |||||
Operating days 6 | |||||||||||
3,483 | 3,229 | 8 | 13,589 | 8,979 | 51 | ||||||
5,026 | 3,688 | 36 | 17,928 | 12,242 | 46 | ||||||
International 5 | 1,074 | 942 | 14 | 3,973 | 3,574 | 11 | |||||
Total | 9,583 | 7,859 | 22 | 35,490 | 24,795 | 43 | |||||
Well Servicing | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Number of rigs | |||||||||||
47 | 52 | (10) | 47 | 52 | (10) | ||||||
47 | 48 | (2) | 47 | 48 | (2) | ||||||
Total | 94 | 100 | (6) | 94 | 100 | (6) | |||||
Operating hours | |||||||||||
11,053 | 9,821 | 13 | 47,269 | 36,254 | 30 | ||||||
30,744 | 29,419 | 5 | 124,035 | 124,916 | (1) | ||||||
Total | 41,797 | 39,240 | 7 | 171,304 | 161,170 | 6 |
nm - calculation not meaningful |
1. Refer to Adjusted EBITDA calculation in Non-GAAP Measures. |
2. Change in long-term debt, net of cash was largely due to its |
3. Total 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) | 2022 | 2021 | 2020 | ||||
Working capital (deficit)1, 2 | (707,800) | 104,228 | 103,036 | ||||
Cash | 49,880 | 13,305 | 44,198 | ||||
Long-term debt | 556,889 | 1,453,884 | 1,384,605 | ||||
Long-term debt, net of cash | 507,009 | 1,440,579 | 1,340,407 | ||||
Total long-term financial liabilities | 562,837 | 1,458,211 | 1,390,647 | ||||
Total assets | 3,183,904 | 2,977,054 | 3,054,493 | ||||
Long-term debt to long term-debt plus shareholder's equity ratio | 0.30 | 0.55 | 0.50 |
1 See Non-GAAP Measures section. |
2 Change in working capital (deficit), was largely due to its |
Three months ended | Twelve months ended | |||||||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | ||||||||||
Capital expenditures | ||||||||||||||||
Upgrade/growth | 13,748 | 3,395 | nm | 68,763 | 20,492 | nm | ||||||||||
Maintenance | 27,491 | 19,518 | 41 | 105,630 | 44,760 | nm | ||||||||||
Proceeds from disposals of property and equipment | (608) | (2,581) | (76) | (47,544) | (7,228) | nm | ||||||||||
Net capital expenditures before acquisitions | 40,631 | 20,332 | nm | 126,849 | 58,024 | nm | ||||||||||
Acquisition of 35 drilling rigs, related equipment, land and buildings | — | — | — | — | 117,928 | nm | ||||||||||
Net capital expenditures | 40,631 | 20,332 | nm | 126,849 | 175,952 | (28) |
nm - calculation not meaningful |
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Revenue | |||||||||||
121,668 | 90,243 | 35 | 434,982 | 249,679 | 74 | ||||||
274,324 | 152,361 | 80 | 892,086 | 538,896 | 66 | ||||||
International | 71,988 | 53,562 | 34 | 250,261 | 207,019 | 21 | |||||
Total revenue | 467,980 | 296,166 | 58 | 1,577,329 | 995,594 | 58 | |||||
Oilfield services expense | 325,247 | 228,146 | 43 | 1,155,083 | 744,195 | 55 |
Revenue for the year ended
CANADIAN OILFIELD SERVICES
Three months ended | Twelve months ended | ||||||||||
2022 | 2021 | % change | 2022 | 2021 | % change | ||||||
Marketed drilling rigs1,2 | |||||||||||
Opening balance | 123 | 127 | 127 | 101 | |||||||
Acquisition | — | — | — | 35 | |||||||
Placed into reserve | — | — | (4) | (9) | |||||||
Ending balance | 123 | 127 | (3) | 123 | 127 | (3) | |||||
Drilling operating days3 | 3,483 | 3,229 | 8 | 13,589 | 8,979 | 51 | |||||
Drilling rig utilization (%)1 | 27.6 | 22.9 | 21 | 27.1 | 18.5 | 46 | |||||
Well servicing rigs | |||||||||||
Opening balance | 52 | 52 | 52 | 52 | |||||||
Decommissions | (5) | — | (5) | — | |||||||
Ending balance | 47 | 52 | (10) | 47 | 52 | (10) | |||||
Well servicing operating hours | 11,053 | 9,821 | 13 | 47,269 | 36,254 | 30 | |||||
Well servicing utilization (%) | 23.1 | 20.5 | 13 | 24.9 | 19.1 | 30 |
1 Excludes coring rig fleet. |
2 Total rigs: 131, (2021 - 137). |
3 Defined as contract drilling days, between spud to rig release. |
The Company recorded revenue of
For the year ended
The operating and financial results for the Company's Canadian operations during 2022 were positively impacted by improved industry conditions that increased both drilling and well servicing activity. In addition, operational activity increased as a result of the Company's timing of the acquisition of 35 land-based drilling rigs in the third quarter of 2021. Offsetting the increase in financial results was the elimination of the
During 2022, the Company moved four under-utilized drilling rigs into its Canadian reserve fleet and decommissioned six non-marketed drilling rigs and five well servicing rigs.
Three months ended | Twelve months ended | ||||||||||
2022 | 2021 | % change | 2022 | 2021 | % change | ||||||
Marketed drilling rigs1 | |||||||||||
Opening balance | 89 | 93 | 93 | 122 | |||||||
Disposal | — | — | (1) | — | |||||||
Placed into reserve | — | — | (3) | (29) | |||||||
Ending balance | 89 | 93 | (4) | 89 | 93 | (4) | |||||
Drilling operating days2 | 5,026 | 3,688 | 36 | 17,928 | 12,242 | 46 | |||||
Drilling rig utilization (%) | 43.0 | 29.4 | 46 | 38.7 | 24.7 | 57 | |||||
Well servicing rigs | |||||||||||
Opening balance | 48 | 48 | 48 | 47 | |||||||
Additions | — | — | — | 1 | |||||||
Decommissions | (1) | — | (1) | — | |||||||
Ending balance | 47 | 48 | (2) | 47 | 48 | (2) | |||||
Well servicing operating hours | 30,744 | 29,419 | 5 | 124,035 | 124,916 | (1) | |||||
Well servicing utilization (%) | 69.6 | 66.6 | 5 | 70.8 | 71.7 | (1) |
1Total rigs: 117, (2021 - 127). |
2 Defined as contract drilling days, between spud to rig release. |
For the year ended
In
Overall operating and financial results for the Company's
During 2022, the Company sold one cold stacked drilling rig from its
INTERNATIONAL OILFIELD SERVICES
Three months ended | Twelve months ended | ||||||||||
2022 | 2021 | % change | 2022 | 2021 | % change | ||||||
Marketed drilling and workover rigs1 | |||||||||||
Opening balance | 34 | 42 | 42 | 48 | |||||||
Disposal | — | — | (2) | — | |||||||
Placed into reserve | — | — | (6) | (6) | |||||||
Ending balance | 34 | 42 | (19) | 34 | 42 | (19) | |||||
Drilling operating days2 | 1,074 | 942 | 14 | 3,973 | 3,574 | 11 | |||||
Drilling rig utilization (%) | 25.4 | 20.1 | 26 | 23.7 | 19.3 | 23 |
1 Total rigs: 43, (2021 - 48). |
2 Defined as contract drilling days, between spud to rig release. |
The Company's international revenues for the year ended
International drilling operating days totaled 3,973 in 2022 compared with 3,574 drilling operating days for the prior year, an increase of 11 percent. International operating days for the three months ended
Operating and financial results from the international operations reflected a steady and incrementally positive operating environment as COVID-19 related disruptions continued to dissipate. The financial results from the Company's international operations were further positively impacted on the currency translation, as
During 2022, the Company sold two cold-stacked drilling rigs located in
DEPRECIATION
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Depreciation | 73,032 | 74,194 | (2) | 281,137 | 288,188 | (2) |
Depreciation expense for the year decreased by two percent to
GENERAL AND ADMINISTRATIVE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
General and administrative | 12,770 | 10,159 | 26 | 48,628 | 38,226 | 27 | |||||
% of revenue | 2.7 | 3.4 | 3.1 | 3.8 |
For the year ended
FOREIGN EXCHANGE AND OTHER (GAIN) LOSS
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Foreign exchange and other (gain) loss | (9,612) | (208) | nm | (19,587) | 11,102 | 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.
LOSS (GAIN) ON ASSET SALE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Loss (gain) on asset sale | 2,451 | (3,596) | nm | (29,347) | (3,596) | nm |
nm - calculation not meaningful |
During the first quarter of 2022, the Company sold two drilling rigs that were cold-stacked in
INTEREST EXPENSE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Interest expense | 34,092 | 25,027 | 36 | 119,277 | 97,596 | 22 |
Interest expenses were incurred on the Company's Credit Facility,
Interest expense increased by 22 percent for the year ended
INCOME TAX (RECOVERY)
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Current income tax | 2,439 | 296 | nm | 995 | 989 | 1 | |||||
Deferred income tax (recovery) | 1,720 | (11,693) | nm | (15,854) | (39,443) | (60) | |||||
Total income tax (recovery) | 4,159 | (11,397) | nm | (14,859) | (38,454) | (61) | |||||
Effective income tax rate (%) | 25.8 | 28.1 | 233.2 | 19.8 |
nm - calculation not meaningful |
The effective income tax rate for the year ended
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per share amounts) | Three months ended | Twelve months ended | |||||||||
2022 | 2021 | % change | 2022 | 2021 | % change | ||||||
Cash provided by operating activities | 121,497 | 39,221 | nm | 319,962 | 178,642 | 79 | |||||
Funds flow from operations | 110,361 | 46,644 | nm | 371,956 | 190,695 | 95 | |||||
Funds flow from operations per common share | $ 0.65 | $ 0.28 | nm | $ 2.12 | $ 1.17 | 81 | |||||
Working capital | (707,800) | 104,228 | nm | (707,800) | 104,228 | nm |
nm - calculation not meaningful |
For the year ended
As of
INVESTING ACTIVITIES
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Acquisition of 35 drilling rigs, related equipment, land and buildings | — | — | — | — | (117,928) | nm | |||||
Purchase of property and equipment | (41,239) | (22,913) | 80 | (174,393) | (65,252) | nm | |||||
Proceeds from disposals of property and equipment | 608 | 2,581 | (76) | 47,544 | 7,228 | nm | |||||
Distribution to non-controlling interest | — | — | nm | (1,852) | — | nm | |||||
Net change in non-cash working capital | (8,717) | (755) | nm | 7,244 | 1,366 | nm | |||||
Cash used in investing activities | (49,348) | (21,087) | nm | (121,457) | (174,586) | (30) |
nm - calculation not meaningful |
Net purchases of property and equipment during the fiscal year ending 2022 totaled
FINANCING ACTIVITIES
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2022 | 2021 | % change | 2022 | 2021 | % change | |||||
Proceeds from long-term debt | 19,968 | 13,143 | 52 | 71,158 | 162,269 | (56) | |||||
Repayments of long-term debt | (18,068) | (4,789) | nm | (101,080) | (89,532) | 13 | |||||
Lease obligation principal repayments | (6,190) | (1,713) | nm | (12,263) | (6,845) | 79 | |||||
Interest paid | (47,774) | (38,594) | 24 | (118,110) | (99,751) | 18 | |||||
Purchase of common shares held in trust | (623) | (379) | 64 | (1,750) | (1,173) | 49 | |||||
Cash used in financing activities | (52,687) | (32,332) | 63 | (162,045) | (35,032) | nm |
nm - calculation not meaningful |
As at
During the fourth quarter of 2021, the Company amended and restated its existing credit agreement with its syndicate lenders, which provides a revolving Credit Facility of
On
During the second quarter of 2019, the Company issued US
The current capital structure of the Company 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.
The Company generally may, at any time and from time to time acquire Senior Notes for cancellation by means of open market purchases or negotiated transactions. However, applicable covenants in the Credit Facility limit the Company's ability to make further repurchases of the Senior Notes to
Covenants
The following is a list of the Company's currently applicable covenants pursuant to the Credit Facility and the covenant calculations as at
Covenant | ||||
The Credit Facility | ||||
Consolidated EBITDA1 | > | $ 373,618 | ||
Consolidated EBITDA to Consolidated Interest Expense1,2 | ≥ 2.50 | 3.22 | ||
Consolidated Senior Debt to Consolidated EBITDA1,3 | ≤ 3.00 | 2.23 |
1 Please refer to "Non-GAAP Measures" and "Overview and Select Annual Information" sections 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 amended and restated credit agreement, a copy of which is available on SEDAR, provides the Company with its Credit Facility and includes requirements that the Company comply with certain covenants including a minimum Consolidated EBITDA requirement, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Senior Debt to Consolidated EBITDA ratio.
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 and restatement of the credit agreement, dated
Senior Notes
The note indenture governing the Senior Notes, a copy of which is available on SEDAR, contains certain restrictions and limitations on the Company's ability to pay dividends; purchase and redeem shares and subordinated debt of the Company; and make certain restricted investments. These restrictions and limitations are tempered by the existence of a number of exceptions to the general prohibitions, 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 at
NEW BUILDS AND MAJOR RETROFITS
During the year-ended
- sold one cold-stacked drilling rig from
the United States fleet and two cold-stacked drilling rigs from its international fleet, - moved four under-utilized drilling rigs to its Canadian reserve fleet, three under-utilized drilling rigs to its
United States reserve fleet, and six under-utilized drilling rigs to its international reserve fleet, - decommissioned six non-marketed rigs in its Canadian, fleet, nine non-marketed rigs in its
United States fleet, and three non-marketed in its international fleet, and; - decommissioned five well-servicing rigs in its Canadian fleet and one well-servicing rig in its United Sates fleet.
The Company is currently directing capital expenditures primarily to maintenance capital items and selective upgrades.
OUTLOOK
Industry Overview
The outlook for oilfield services continues to be positive with steady demand for services and tightening rig supply. Recessionary pressures for many global economies and continued inflationary concerns continue to add uncertainty to the outlook for the oil and natural gas industry. However, despite a potential economic slowdown in major economies, demand for crude oil is expected to improve year-over-year. Furthermore,
The Company expects crude oil demand to remain relatively steady and anticipates that moderated oil supply in a positive commodity price environment will continue to support steady oilfield services activity and positive revenue rates over the course of the 2023 year. The Company continues to expect North American oil and natural gas producers to remain committed to prioritizing shareholder returns. However, the Company also expect producers maintain and grow production in consideration of well productivity declines and low drilled but uncompleted ("DUC") well inventory.
Over the short-term, there remains uncertainty regarding macro-economic conditions that may impact supply, demand, 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, the impact of ongoing hostilities in
The Company remains committed to disciplined capital allocation and debt retirement. The Company has budgeted base capital expenditures for 2023 of approximately
Canadian Activity
Canadian activity, representing 28 percent of total revenue in 2022, remained steady over the fourth quarter due to supportive industry conditions and winter drilling conditions. The Company expects activity to remain stable in the first quarter of 2023 as operations continue through the winter drilling season. Furthermore, the recently announced industrial development agreement between the Government of
As of
United States Activity
As of
International Activity
International activity, representing 16 percent of total revenue in 2022, improved over the fourth quarter of 2022 with two drilling rigs 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 economic and market conditions, crude oil and natural gas prices, political events including the ongoing hostilities between
CONFERENCE CALL
A conference call will be held to discuss the Company's fourth quarter 2022 results at
Consolidated Statements of Financial Position
As at |
|
| ||
(Unaudited - in thousands of Canadian dollars) | ||||
Assets | ||||
Current Assets | ||||
Cash | $ 49,880 | $ 13,305 | ||
Accounts receivable | 359,933 | 226,807 | ||
Inventories, prepaid, investments and other | 60,758 | 49,172 | ||
Income taxes receivable | 40 | 580 | ||
Total current assets | 470,611 | 289,864 | ||
Property and equipment | 2,516,923 | 2,512,953 | ||
Deferred income taxes | 196,370 | 174,237 | ||
Total assets | $ 3,183,904 | $ 2,977,054 | ||
Liabilities | ||||
Current Liabilities | ||||
Accounts payable and accruals | $ 268,243 | $ 177,932 | ||
Share-based compensation | 11,735 | 1,055 | ||
Income taxes payable | 4,423 | 1,389 | ||
Current portion of lease obligations | 11,324 | 5,260 | ||
Current portion of long-term debt | 882,686 | — | ||
Total current liabilities | 1,178,411 | 185,636 | ||
Lease obligations | 5,948 | 4,327 | ||
Long-term debt | 556,889 | 1,453,884 | ||
Share-based compensation | 13,635 | 7,966 | ||
Income taxes payable | 5,394 | 7,647 | ||
Deferred income taxes | 134,857 | 120,100 | ||
Non-controlling interest | — | 4,832 | ||
Total liabilities | 1,895,134 | 1,784,392 | ||
Shareholders' Equity | ||||
Shareholder's capital | 267,790 | 230,376 | ||
Contributed surplus | 23,398 | 23,197 | ||
Equity component of subordinate convertible debenture | — | 2,380 | ||
Accumulated other comprehensive income | 276,053 | 223,308 | ||
Retained earnings | 721,529 | 713,401 | ||
Total shareholders' equity | 1,288,770 | 1,192,662 | ||
Total liabilities and shareholders' equity | $ 3,183,904 | $ 2,977,054 |
Consolidated Statements of Income (Loss)
Three months ended | Twelve months ended | |||||||
|
|
|
| |||||
(Unaudited - in thousands of Canadian dollars, except per share data) | ||||||||
Revenue | $ 467,980 | $ 296,166 | $ 1,577,329 | $ 995,594 | ||||
Expenses | ||||||||
Oilfield services | 325,247 | 228,146 | 1,155,083 | 744,195 | ||||
Depreciation | 73,032 | 74,194 | 281,137 | 288,188 | ||||
General and administrative | 12,770 | 10,159 | 48,628 | 38,226 | ||||
Restructuring | — | 350 | — | 4,580 | ||||
Share-based compensation | 11,662 | (5) | 19,711 | 6,377 | ||||
Foreign exchange and other (gain) loss | (9,612) | (208) | (19,587) | 11,102 | ||||
Total expenses | 413,099 | 312,636 | 1,484,972 | 1,092,668 | ||||
Income (loss) before interest expense, accretion of deferred financing charges, other losses (gains) and income taxes | 54,881 | (16,470) | 92,357 | (97,074) | ||||
Loss (gain) on asset sale | 2,451 | (3,596) | (29,347) | (3,596) | ||||
Gain on repurchase of unsecured Senior Notes | — | — | — | (7,431) | ||||
Interest expense | 34,092 | 25,027 | 119,277 | 97,596 | ||||
Accretion of deferred financing charges | 2,199 | 2,710 | 8,800 | 10,819 | ||||
Income (loss) before income tax | 16,139 | (40,611) | (6,373) | (194,462) | ||||
Income tax (recovery) | ||||||||
Current income tax | 2,439 | 296 | 995 | 989 | ||||
Deferred income tax (recovery) | 1,720 | (11,693) | (15,854) | (39,443) | ||||
Total income tax (recovery) | 4,159 | (11,397) | (14,859) | (38,454) | ||||
Net income (loss) from continued operations | 11,980 | (29,214) | 8,486 | (156,008) | ||||
Loss from discontinued operations | — | (30) | — | (3,452) | ||||
Net income (loss) | 11,980 | (29,244) | 8,486 | (159,460) | ||||
Net income (loss) attributable to: | ||||||||
Common shareholders | 11,897 | (29,235) | 8,128 | (159,475) | ||||
Non-controlling interests | 83 | (9) | 358 | 15 | ||||
$ 11,980 | $ (29,244) | $ 8,486 | $ (159,460) | |||||
Net income (loss) attributable to common shareholders per common share | ||||||||
Basic | $ 0.07 | $ (0.18) | $ 0.05 | $ (0.98) | ||||
Diluted | $ 0.07 | $ (0.18) | $ 0.05 | $ (0.98) |
Consolidated Statements of Cash Flows
Three months ended | Twelve months ended | |||||||
(Unaudited - in thousands of Canadian dollars) |
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Cash provided by (used in) | ||||||||
Operating activities | ||||||||
Net income (loss) | $ 11,980 | $ (29,244) | $ 8,486 | $ (159,460) | ||||
Items not affecting cash | ||||||||
Depreciation | 73,032 | 74,194 | 281,137 | 288,188 | ||||
Share-based compensation, net of cash settlements | 11,452 | (5) | 17,765 | 6,377 | ||||
Loss (gain) in asset sale | 2,451 | (3,596) | (29,347) | (3,596) | ||||
Gain on repurchase of unsecured Senior Notes | — | — | — | (7,431) | ||||
Unrealized foreign exchange and other gain | (26,565) | (10,749) | (18,308) | (2,355) | ||||
Accretion on deferred financing charges | 2,199 | 2,710 | 8,800 | 10,819 | ||||
Interest expense | 34,092 | 25,027 | 119,277 | 97,596 | ||||
Deferred income tax recovery | 1,720 | (11,693) | (15,854) | (39,443) | ||||
Funds flow from operations | 110,361 | 46,644 | 371,956 | 190,695 | ||||
Net change in non-cash working capital | 11,136 | (7,423) | (51,994) | (12,053) | ||||
Cash provided by operating activities | 121,497 | 39,221 | 319,962 | 178,642 | ||||
Investing activities | ||||||||
Acquisition of 35 drilling rigs, related equipment, land and buildings | — | — | — | (117,928) | ||||
Purchase of property and equipment | (41,239) | (22,913) | (174,393) | (65,252) | ||||
Proceeds from disposals of property and equipment | 608 | 2,581 | 47,544 | 7,228 | ||||
Distribution to non-controlling interest | — | — | (1,852) | — | ||||
Net change in non-cash working capital | (8,717) | (755) | 7,244 | 1,366 | ||||
Cash used in investing activities | (49,348) | (21,087) | (121,457) | (174,586) | ||||
Financing activities | ||||||||
Proceeds from long-term debt | 19,968 | 13,143 | 71,158 | 162,269 | ||||
Repayments of long-term debt | (18,068) | (4,789) | (101,080) | (89,532) | ||||
Lease obligation principal repayments | (6,190) | (1,713) | (12,263) | (6,845) | ||||
Interest paid | (47,774) | (38,594) | (118,110) | (99,751) | ||||
Purchase of common shares held in trust | (623) | (379) | (1,750) | (1,173) | ||||
Cash used in financing activities | (52,687) | (32,332) | (162,045) | (35,032) | ||||
Net increase (decrease) in cash | 19,462 | (14,198) | 36,460 | (30,976) | ||||
Effects of foreign exchange on cash | 424 | 3,177 | 115 | 83 | ||||
Cash – beginning of period | 29,994 | 24,326 | 13,305 | 44,198 | ||||
Cash – end of period | $ 49,880 | $ 13,305 | $ 49,880 | $ 13,305 |
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 and Adjusted EBITDA per common share are 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 impaired 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 expenses, gain on repurchase of unsecured Senior Notes and fair value adjustments on financial assets and liabilities, as the Company does not deem these items to relate to its core drilling and well servicing business. Adjusted EBITDA is not intended to represent net income (loss) as calculated in accordance with IFRS.
Adjusted EBITDA
Three months ended | Twelve months ended | |||||||||
($ thousands) | 2022 | 2021 | 2022 | 2021 | ||||||
Income (loss) before income taxes | 16,139 | (40,611) | (6,373) | (194,462) | ||||||
Add-back/(deduct) | ||||||||||
Interest expense | 34,092 | 25,027 | 119,277 | 97,596 | ||||||
Accretion of deferred financing charges | 2,199 | 2,710 | 8,800 | 10,819 | ||||||
Depreciation | 73,032 | 74,194 | 281,137 | 288,188 | ||||||
Share-based compensation | 11,662 | (5) | 19,711 | 6,377 | ||||||
Loss (gain) on asset sale | 2,451 | (3,596) | (29,347) | (3,596) | ||||||
Gain on repurchase of unsecured Senior Notes | — | — | — | (7,431) | ||||||
Foreign exchange and other (gain) loss | (9,612) | (208) | (19,587) | 11,102 | ||||||
Restructuring | — | 350 | — | 4,580 | ||||||
Adjusted EBITDA | 129,963 | 57,861 | 373,618 | 213,173 |
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.
Working Capital
Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
Certain statements herein constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule" 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; 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, the global COVID-19 pandemic, the potential reinstatement or removal of COVID-19 mitigation strategies and the impact thereof upon the Company, its customers and its business, new pandemics, 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. Readers are cautioned that the lists of important factors contained herein are not exhaustive. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.
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.
For further information:
SOURCE
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