2023 HIGHLIGHTS
- Ensign's fourth quarter and year-end 2023 results reflect the Company's commitment to revenue rate discipline, focus on cash flow generation, and continued debt reduction.
- Revenue for 2023 was
$1,791.8 million , a 14 percent increase from 2022 revenue of$1,577.3 million . - Revenue amounts and percentage of total by geographic area:
Canada -$446.4 million , 25 percent;United States -$1,040.8 million , 58 percent; and- International -
$304.6 million , 17 percent.
- Adjusted EBITDA for 2023 was
$490.2 million , a 31 percent increase from Adjusted EBITDA of$373.6 million for 2022. - Funds flow from operations for 2023 increased 25 percent to
$464.9 million from$372.0 million in the prior year. - Net income for 2023 was
$41.2 million , up from$8.1 million of the prior year.
FINANCIAL HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per share data)
Three months ended | Twelve months ended | ||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Revenue | 430,540 | 467,980 | (8) | 1,791,767 | 1,577,329 | 14 | |||||
Adjusted EBITDA 1 | 128,998 | 129,963 | (1) | 490,233 | 373,618 | 31 | |||||
Adjusted EBITDA per common share 1 | |||||||||||
Basic | $ 0.71 | $ 0.76 | (7) | $ 2.67 | $ 2.13 | 25 | |||||
Diluted | $ 0.70 | $ 0.76 | (8) | $ 2.65 | $ 2.12 | 25 | |||||
Net income attributable to common | 31,922 | 11,897 | nm | 41,236 | 8,128 | nm | |||||
Net income attributable to common | |||||||||||
Basic | $ 0.17 | $ 0.07 | nm | $ 0.22 | $ 0.05 | nm | |||||
Diluted | $ 0.17 | $ 0.07 | nm | $ 0.22 | $ 0.05 | nm | |||||
Cash provided by operating activities | 115,606 | 121,497 | (5) | 492,517 | 319,962 | 54 | |||||
Funds flow from operations | 110,231 | 110,361 | — | 464,882 | 371,956 | 25 | |||||
Funds flow from operations per common | |||||||||||
Basic | $ 0.60 | $ 0.65 | (8) | $ 2.53 | $ 2.12 | 19 | |||||
Diluted | $ 0.59 | $ 0.65 | (9) | $ 2.51 | $ 2.11 | 19 | |||||
Weighted average common shares - | 183,612 | 183,574 | — | 183,878 | 175,578 | 5 | |||||
Weighted average common shares - | 184,541 | 184,652 | — | 185,049 | 176,430 | 5 |
nm - calculation not meaningful |
1. Refer to Adjusted EBITDA calculation in Non-GAAP Measures. |
- Canadian drilling recorded 12,373 operating days in 2023, a nine percent decrease from 13,589 operating days in 2022. Canadian well servicing recorded 46,523 operating hours in 2023, a two percent decrease from 47,269 operating hours in 2022.
United States drilling recorded 15,759 operating days in 2023, a 12 percent decrease from 17,928 operating days in 2022.United States well servicing recorded 121,147 operating hours in 2023, a two percent decrease from the 124,035 operating hours in 2022.- International drilling recorded 4,946 operating days in 2023, a 24 percent increase from 3,973 operating days recorded in 2022.
OPERATING HIGHLIGHTS
(Unaudited)
Three months ended | Twelve months ended | ||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Drilling | |||||||||||
Number of marketed rigs 1 | |||||||||||
117 | 123 | (5) | 117 | 123 | (5) | ||||||
83 | 89 | (7) | 83 | 89 | (7) | ||||||
International 3 | 32 | 34 | (6) | 32 | 34 | (6) | |||||
Total | 232 | 246 | (6) | 232 | 246 | (6) | |||||
Operating days 4 | |||||||||||
3,180 | 3,483 | (9) | 12,373 | 13,589 | (9) | ||||||
3,259 | 5,026 | (35) | 15,759 | 17,928 | (12) | ||||||
International 3 | 1,330 | 1,074 | 24 | 4,946 | 3,973 | 24 | |||||
Total | 7,769 | 9,583 | (19) | 33,078 | 35,490 | (7) | |||||
Well Servicing | |||||||||||
Number of rigs | |||||||||||
45 | 47 | (4) | 45 | 47 | (4) | ||||||
47 | 47 | — | 47 | 47 | — | ||||||
Total | 92 | 94 | (2) | 92 | 94 | (2) | |||||
Operating hours | |||||||||||
10,319 | 11,053 | (7) | 46,523 | 47,269 | (2) | ||||||
30,186 | 30,744 | (2) | 121,147 | 124,035 | (2) | ||||||
Total | 40,505 | 41,797 | (3) | 167,670 | 171,304 | (2) |
1. Total rigs: |
2. Excludes coring rigs. |
3. Includes workover rigs |
4. Defined as contract drilling days, between spud to rig release. |
- Net repayments against debt totaled
$217.6 million sinceDecember 31, 2022 , exceeding the Company's 2023 debt reduction target. - Since the first quarter of 2019, when the Company's total debt, net of cash, peaked at
$1,688.1 million , the Company has reduced net debt by$498.2 million over the past five years. Notably, the Company reduced net debt by almost$500.0 million while completing two counter-cyclical, accretive acquisitions over the same five year period, totaling$162.7 million . - The Company's debt reduction for 2024 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. - In the fourth quarter of 2023, the Company agreed on a three-year
$369.0 million term credit facility agreement with its syndicate of lenders (the "Term Facility"). Concurrently with the new Term Facility agreement, the Company has also amended and extended the existing$900.0 million Credit Facility. The maturity date of the Credit Facility has been extended for three years toOctober 2026 . The Company now expects the blended interest rate between the Term Facility and Credit Facility for the fiscal 2024 to be approximately eight percent. In addition, the Company's outstanding Senior Notes were redeemed during the fourth quarter of 2023.
FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS
As at ($ thousands) | 2023 | 2022 | 2021 | ||||
Working capital (deficit)1, 2 | 15,780 | (707,800) | 104,228 | ||||
Cash | 20,501 | 49,880 | 13,305 | ||||
Total debt, net of cash | 1,189,848 | 1,389,695 | 1,440,579 | ||||
Total assets | 2,947,986 | 3,183,904 | 2,977,054 | ||||
Total debt to total debt plus shareholder's equity ratio | 0.48 | 0.53 | 0.55 |
1 See Non-GAAP Measures section. |
2 Change in working capital (deficit), was largely due to its |
- Net capital expenditures for the calendar year 2023 totaled
$160.7 million , consisting of$16.1 million in upgrade capital,$159.7 million in maintenance capital, offset by proceeds of$15.1 million from equipment disposals. - Capital expenditures for the calendar year 2024 are targeted to be approximately
$147.0 million , primarily related to maintenance expenditures. In addition, the Company may consider additional equipment upgrade, growth, or relocation projects in response to customer demand and under appropriate contract terms.
CAPITAL EXPENDITURES HIGHLIGHTS
Three months ended | Twelve months ended | |||||||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||
Capital expenditures | ||||||||||||||||
Upgrade/growth | 2,136 | 13,748 | nm | 16,103 | 68,763 | (77) | ||||||||||
Maintenance | 29,422 | 27,491 | 7 | 159,738 | 105,630 | 51 | ||||||||||
Proceeds from disposals of property and equipment | (2,787) | (608) | nm | (15,132) | (47,544) | (68) | ||||||||||
Net capital expenditures | 28,771 | 40,631 | (29) | 160,709 | 126,849 | 27 |
nm - calculation not meaningful |
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, Adjusted EBITDA per common share and working capital. 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. |
OVERVIEW
Revenue for the year ended
Net income attributed to common shareholders for the year ended
The Company's operating days were lower in 2023, as compared with 2022, as a result of volatile commodity prices, customer capital discipline and acquisition and merger activity between oil and natural gas producers in both
Oilfield services continued to be constructive despite the recent volatility in global crude oil and natural gas commodity prices and uncertain global economic and geopolitical conditions. Global inflationary pressures, economic uncertainty, and geopolitical tensions had impacted global commodity prices, reinforced producer and contractor capital discipline, and added uncertainty in the back half of 2023. However, despite these short-term headwinds, the outlook for global demand for crude oil is expected to continue to increase year-over-year and OPEC+ nations continue to moderate supply in response to market conditions.
Over the near term, there remains uncertainty regarding several factors that may impact the oil and natural gas industry which will impact the demand for oilfield services. The factors are but not limited to, the impacts of ongoing hostilities in
The Company exited 2023 with a working capital surplus of
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Revenue | |||||||||||
117,400 | 121,668 | (4) | 446,393 | 434,982 | 3 | ||||||
231,683 | 274,324 | (16) | 1,040,764 | 892,086 | 17 | ||||||
International | 81,457 | 71,988 | 13 | 304,610 | 250,261 | 22 | |||||
Total revenue | 430,540 | 467,980 | (8) | 1,791,767 | 1,577,329 | 14 | |||||
Oilfield services expense | 286,629 | 325,247 | (12) | 1,243,558 | 1,155,083 | 8 |
Revenue for the year ended
CANADIAN OILFIELD SERVICES
Three months ended | Twelve months ended | ||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Marketed drilling rigs1,2 | |||||||||||
Opening balance | 115 | 123 | 123 | 127 | |||||||
Transfers, net | 2 | — | 3 | — | |||||||
Placed into reserve | — | — | (9) | (4) | |||||||
Ending balance | 117 | 123 | (5) | 117 | 123 | (5) | |||||
Drilling operating days3 | 3,180 | 3,483 | (9) | 12,373 | 13,589 | (9) | |||||
Drilling rig utilization (%)1 | 26.2 | 27.6 | (5) | 25.7 | 27.1 | (5) | |||||
Well servicing rigs | |||||||||||
Opening balance | 47 | 52 | 47 | 52 | |||||||
Decommissions | (2) | (5) | (2) | (5) | |||||||
Ending balance | 45 | 47 | (4) | 45 | 47 | (4) | |||||
Well servicing operating hours | 10,319 | 11,053 | (7) | 46,523 | 47,269 | (2) | |||||
Well servicing utilization (%) | 23.9 | 23.1 | 3 | 27.1 | 24.9 | 9 |
1 Excludes coring rig fleet. |
2 Total rigs: 128, (2022 - 131). |
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 2023 were negatively impacted by fluctuating commodity prices and producer capital discipline curtailing or delaying certain drilling programs. However, the financial results for the Company's Canadian operations during 2023 were positively impacted by revenue rate increases year-over-year due to market conditions.
During 2023, the Company moved nine under-utilized drilling rigs into its Canadian reserve fleet, transferred three drilling rigs from
Three months ended | Twelve months ended | ||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Marketed drilling rigs1 | |||||||||||
Opening balance | 85 | 89 | 89 | 93 | |||||||
Transfers, net | (2) | — | (3) | — | |||||||
Disposal | — | — | — | (1) | |||||||
Placed into reserve | — | — | (3) | (3) | |||||||
Ending balance | 83 | 89 | (7) | 83 | 89 | (7) | |||||
Drilling operating days2 | 3,259 | 5,026 | (35) | 15,759 | 17,928 | (12) | |||||
Drilling rig utilization (%) | 30.5 | 43.0 | (29) | 37.1 | 38.7 | (4) | |||||
Well servicing rigs | |||||||||||
Opening balance | 47 | 48 | 47 | 48 | |||||||
Decommissions | — | (1) | — | (1) | |||||||
Ending balance | 47 | 47 | — | 47 | 47 | — | |||||
Well servicing operating hours | 30,186 | 30,744 | (2) | 121,147 | 124,035 | (2) | |||||
Well servicing utilization (%) | 69.8 | 69.6 | — | 70.6 | 70.8 | — |
1Total rigs: 103, (2022 - 117). |
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 2023, the Company transferred three under-utilized drilling rigs into its
INTERNATIONAL OILFIELD SERVICES
Three months ended | Twelve months ended | ||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Marketed drilling and workover rigs1 | |||||||||||
Opening balance | 32 | 34 | 34 | 42 | |||||||
Disposal | — | — | — | (2) | |||||||
Placed into reserve | — | — | (2) | (6) | |||||||
Ending balance | 32 | 34 | (6) | 32 | 34 | (6) | |||||
Drilling operating days2 | 1,330 | 1,074 | 24 | 4,946 | 3,973 | 24 | |||||
Drilling rig utilization (%) | 33.6 | 25.4 | 32 | 31.5 | 23.7 | 33 |
1 Total rigs: 37, (2022 - 43). |
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 4,946 in 2023 compared with 3,973 drilling operating days for the prior year, an increase of 24 percent. International operating days for the three months ended
Operating and financial results from the international operations reflect generally supportive industry conditions and increasing drilling activity, as drilling rig reactivations occurred at various points in year. The financial results from the Company's international operations were further positively impacted by the currency translation, as the USD strengthened relative to the Canadian dollar for the year ended
During 2023, the Company transferred two under-utilized drilling rigs into its international operations reserve fleet and decommissioned six non-marketed drilling rigs.
DEPRECIATION
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Depreciation | 77,696 | 73,032 | 6 | 307,343 | 281,137 | 9 |
Depreciation expense for the year increased by nine percent to
GENERAL AND ADMINISTRATIVE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
General and administrative | 14,913 | 12,770 | 17 | 57,976 | 48,628 | 19 | |||||
% of revenue | 3.5 | 2.7 | 3.2 | 3.1 |
For the year ended
FOREIGN EXCHANGE AND OTHER (GAIN) LOSS
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Foreign exchange and other (gain) loss | (6,010) | (9,612) | (37) | 3,768 | (19,587) | nm |
nm - calculation not meaningful |
Included in this amount is the impact of foreign currency fluctuations in the Company's subsidiaries that have functional currencies other than the Canadian dollar.
INTEREST EXPENSE
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Interest expense | 29,460 | 34,092 | (14) | 126,683 | 119,277 | 6 |
Interest expenses were incurred on the Company's Credit Facility,
Interest expense increased by six percent for the year ended
INCOME TAX (RECOVERY)
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Current income tax | 2,952 | 2,439 | 21 | 4,909 | 995 | nm | |||||
Deferred income tax (recovery) | (3,908) | 1,720 | nm | 1,090 | (15,854) | nm | |||||
Total income tax (recovery) | (956) | 4,159 | nm | 5,999 | (14,859) | nm | |||||
Effective income tax rate (%) | (3.1) | 25.8 | 12.6 | 233.2 |
nm - calculation not meaningful |
The effective income tax rate for the year ended December 31, 2023 was 12.6 percent compared with 233.2 percent for the year ended
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per share amounts) | Three months ended | Twelve months ended | |||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||
Cash provided by operating activities | 115,606 | 121,497 | (5) | 492,517 | 319,962 | 54 | |||||
Funds flow from operations | 110,231 | 110,361 | — | 464,882 | 371,956 | 25 | |||||
Funds flow from operations per common share | $ 0.60 | $ 0.65 | (8) | $ 2.53 | $ 2.12 | 19 | |||||
Working capital | 15,780 | (707,800) | nm | 15,780 | (707,800) | nm |
nm - calculation not meaningful |
For the year ended
As of
INVESTING ACTIVITIES
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Purchase of property and equipment | (31,558) | (41,239) | (23) | (175,841) | (174,393) | 1 | |||||
Proceeds from disposals of property and equipment | 2,787 | 608 | nm | 15,132 | 47,544 | (68) | |||||
Distribution to non-controlling interest | — | — | nm | — | (1,852) | nm | |||||
Net change in non-cash working capital | 6,364 | (8,717) | nm | 8,081 | 7,244 | 12 | |||||
Cash used in investing activities | (22,407) | (49,348) | (55) | (152,628) | (121,457) | 26 |
nm - calculation not meaningful |
Net purchases of property and equipment during the fiscal year ending 2023 totaled
FINANCING ACTIVITIES
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||
Proceeds from long-term debt | 19,968 | 19,968 | — | 611,686 | 71,158 | nm | |||||
Repayments of long-term debt | (82,374) | (18,068) | nm | (829,308) | (101,080) | nm | |||||
Lease obligation principal repayments | (2,207) | (6,190) | (64) | (14,506) | (12,263) | 18 | |||||
Interest paid | (50,799) | (47,774) | 6 | (132,221) | (118,110) | 12 | |||||
Purchase of common shares held in trust | (488) | (623) | (22) | (1,931) | (1,750) | 10 | |||||
Cash used in financing activities | (115,900) | (52,687) | nm | (366,280) | (162,045) | nm |
nm - calculation not meaningful |
As at
On
The Term Facility requires repayments of at least
The amended and restated Credit Facility provides the Company with continued access to revolver capacity in a dynamic industry environment.
In
The current capital structure of the Company consisting of the Credit Facility and the Term Facility, 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.
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 Net Debt to Consolidated EBITDA1 | ≤ 4.00 | 2.46 | ||
Consolidated EBITDA to Consolidated Interest Expense1,2 | ≥ 2.50 | 3.95 | ||
Consolidated Net Senior Debt to Consolidated EBITDA1,3 | ≤ 2.50 | 2.44 |
1Consolidated Net Debt is defined as consolidated total debt, less cash and cash equivalent. 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. |
2 Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis. |
3 Consolidated Net Senior Debt is defined as Consolidated Total Debt minus subordinated debt, cash and cash equivalent. |
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 Consolidated Net Debt to Consolidated EBITDA ratio, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Net Senior Debt to Consolidated EBITDA ratio.
OUTLOOK
Industry Overview
The outlook for oilfield services continues to be constructive despite volatile commodity prices and macroeconomic pressures. Geopolitical tensions and hostilities in areas of the
Constructively, the outlook for global demand for crude oil continues to forecast year-over-year growth. Furthermore, OPEC+ nations continue to monitor the oil markets and are expected to maintain moderated supply over the short-term. Global crude prices remained range bound over the fourth quarter and into the first quarter of 2024, due in part to the hostilities in the
Over the short-term, volatile commodity prices have impacted the industry rig count in
In 2024, the Company expects positive oil prices to support relatively steady oilfield services activity in order to maintain or potentially grow production, especially so in consideration of well productivity declines and low drilled but uncompleted ("DUC") well inventory in certain producing areas in
The Company remains committed to disciplined capital allocation and debt repayment. The Company successfully reached the targeted
The Company has budgeted base capital expenditures for 2024 of approximately
Canadian Activity
Canadian activity, representing 25 percent of total revenue in 2023, increased in the fourth quarter of 2023 compared to the third quarter of 2023 as operations entered the winter drilling season. Activity in
As of
United States Activity
As of
International Activity
International activity, representing 17 percent of total revenue in 2023, remained steady in the fourth quarter of 2023 and is expected to improve in the first quarter of 2024. Currently, the Company has three rigs active in
Activity in
As of
RISKS AND UNCERTAINTIES
The Company is subject to numerous risks and uncertainties. A discussion of certain risks faced by the Company may be found hereinbelow and under the "Risk Factors" section of the Company's Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company's Management's Discussion & Analysis ("MD&A") for the year ended
The Company's risk factors and management of those risks have not changed substantially from those as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company's future business operations or financial condition. If any such potential events described in the Company's AIF or otherwise actually occur, or described events intensify, overall business, operating results and the financial condition of the Company could be materially adversely affected.
CONFERENCE CALL
A conference call will be held to discuss the Company's fourth quarter 2023 results at
Consolidated Statements of Financial Position
As at |
|
| ||
(Unaudited - in thousands of Canadian dollars) | ||||
Assets | ||||
Current Assets | ||||
Cash | $ 20,501 | $ 49,880 | ||
Accounts receivable | 304,544 | 359,933 | ||
Inventories, prepaid, investments and other | 56,809 | 60,758 | ||
Income taxes receivable | — | 40 | ||
Total current assets | 381,854 | 470,611 | ||
Property and equipment | 2,356,487 | 2,516,923 | ||
Deferred income taxes | 209,645 | 196,370 | ||
Total assets | $ 2,947,986 | $ 3,183,904 | ||
Liabilities | ||||
Current Liabilities | ||||
Accounts payable and accruals | $ 231,838 | $ 268,243 | ||
Share-based compensation | 11,014 | 11,735 | ||
Income taxes payable | 4,176 | 4,423 | ||
Current portion of lease obligations | 8,346 | 11,324 | ||
Current portion of long-term debt | 110,700 | 882,686 | ||
Total current liabilities | 366,074 | 1,178,411 | ||
Lease obligations | 11,589 | 5,948 | ||
Long-term debt | 1,099,649 | 556,889 | ||
Share-based compensation | 6,606 | 13,635 | ||
Income taxes payable | 8,809 | 5,394 | ||
Deferred income taxes | 146,497 | 134,857 | ||
Total liabilities | 1,639,224 | 1,895,134 | ||
Shareholders' Equity | ||||
Shareholder's capital | 267,482 | 267,790 | ||
Contributed surplus | 23,750 | 23,398 | ||
Accumulated other comprehensive income | 254,765 | 276,053 | ||
Retained earnings | 762,765 | 721,529 | ||
Total shareholders' equity | 1,308,762 | 1,288,770 | ||
Total liabilities and shareholders' equity | $ 2,947,986 | $ 3,183,904 |
Consolidated Statements of Income
Three months ended | Twelve months ended | |||||||
|
|
|
| |||||
(Unaudited - in thousands of Canadian dollars, except | ||||||||
Revenue | $ 430,540 | $ 467,980 | $ 1,791,767 | $ 1,577,329 | ||||
Expenses | ||||||||
Oilfield services | 286,629 | 325,247 | 1,243,558 | 1,155,083 | ||||
Depreciation | 77,696 | 73,032 | 307,343 | 281,137 | ||||
General and administrative | 14,913 | 12,770 | 57,976 | 48,628 | ||||
Share-based compensation | (5,491) | 11,662 | 2,344 | 19,711 | ||||
Foreign exchange and other (gain) loss | (6,010) | (9,612) | 3,768 | (19,587) | ||||
Total expenses | 367,737 | 413,099 | 1,614,989 | 1,484,972 | ||||
Income before interest expense, accretion of | 62,803 | 54,881 | 176,778 | 92,357 | ||||
Loss (gain) on asset sale | 108 | 2,451 | (6,476) | (29,347) | ||||
Interest expense | 29,460 | 34,092 | 126,683 | 119,277 | ||||
Accretion of deferred financing charges | 2,273 | 2,199 | 8,872 | 8,800 | ||||
Income (loss) before income tax | 30,962 | 16,139 | 47,699 | (6,373) | ||||
Income tax (recovery) | ||||||||
Current income tax | 2,952 | 2,439 | 4,909 | 995 | ||||
Deferred income tax (recovery) | (3,908) | 1,720 | 1,090 | (15,854) | ||||
Total income tax (recovery) | (956) | 4,159 | 5,999 | (14,859) | ||||
Net income | 31,918 | 11,980 | 41,700 | 8,486 | ||||
Net income (loss) attributable to: | ||||||||
Common shareholders | 31,922 | 11,897 | 41,236 | 8,128 | ||||
Non-controlling interests | (4) | 83 | 464 | 358 | ||||
$ 31,918 | $ 11,980 | $ 41,700 | $ 8,486 | |||||
Net income attributable to common shareholders per | ||||||||
Basic | $ 0.17 | $ 0.07 | $ 0.22 | $ 0.05 | ||||
Diluted | $ 0.18 | $ 0.07 | $ 0.22 | $ 0.05 |
Consolidated Statements of Cash Flows
Three months ended | Twelve months ended | |||||||
(Unaudited - in thousands of Canadian dollars) | December |
|
|
| ||||
Cash provided by (used in) | ||||||||
Operating activities | ||||||||
Net income | $ 31,918 | $ 11,980 | $ 41,700 | $ 8,486 | ||||
Items not affecting cash | ||||||||
Depreciation | 77,696 | 73,032 | 307,343 | 281,137 | ||||
Share-based compensation, net of cash settlements | (8,179) | 11,452 | (8,136) | 17,765 | ||||
Loss (gain) in asset sale | 108 | 2,451 | (6,476) | (29,347) | ||||
Unrealized foreign exchange and other gain | (19,137) | (26,565) | (6,194) | (18,308) | ||||
Accretion on deferred financing charges | 2,273 | 2,199 | 8,872 | 8,800 | ||||
Interest expense | 29,460 | 34,092 | 126,683 | 119,277 | ||||
Deferred income tax recovery | (3,908) | 1,720 | 1,090 | (15,854) | ||||
Funds flow from operations | 110,231 | 110,361 | 464,882 | 371,956 | ||||
Net change in non-cash working capital | 5,375 | 11,136 | 27,635 | (51,994) | ||||
Cash provided by operating activities | 115,606 | 121,497 | 492,517 | 319,962 | ||||
Investing activities | ||||||||
Purchase of property and equipment | (31,558) | (41,239) | (175,841) | (174,393) | ||||
Proceeds from disposals of property and equipment | 2,787 | 608 | 15,132 | 47,544 | ||||
Distribution to non-controlling interest | — | — | — | (1,852) | ||||
Net change in non-cash working capital | 6,364 | (8,717) | 8,081 | 7,244 | ||||
Cash used in investing activities | (22,407) | (49,348) | (152,628) | (121,457) | ||||
Financing activities | ||||||||
Proceeds from long-term debt | 19,968 | 19,968 | 611,686 | 71,158 | ||||
Repayments of long-term debt | (82,374) | (18,068) | (829,308) | (101,080) | ||||
Lease obligation principal repayments | (2,207) | (6,190) | (14,506) | (12,263) | ||||
Interest paid | (50,799) | (47,774) | (132,221) | (118,110) | ||||
Purchase of common shares held in trust | (488) | (623) | (1,931) | (1,750) | ||||
Cash used in financing activities | (115,900) | (52,687) | (366,280) | (162,045) | ||||
Net (decrease) increase in cash | (22,701) | 19,462 | (26,391) | 36,460 | ||||
Effects of foreign exchange on cash | (3,875) | 424 | (2,988) | 115 | ||||
Cash – beginning of period | 47,077 | 29,994 | 49,880 | 13,305 | ||||
Cash – end of period | $ 20,501 | $ 49,880 | $ 20,501 | $ 49,880 |
Non-GAAP Measures
Adjusted EBITDA, Adjusted EBITDA per common share, working capital and Consolidated EBITDA. These non-GAAP 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.
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 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) | 2023 | 2022 | 2023 | 2022 | ||||||
Income (loss) before income taxes | 30,962 | 16,139 | 47,699 | (6,373) | ||||||
Add-back/(deduct) | ||||||||||
Interest expense | 29,460 | 34,092 | 126,683 | 119,277 | ||||||
Accretion of deferred financing charges | 2,273 | 2,199 | 8,872 | 8,800 | ||||||
Depreciation | 77,696 | 73,032 | 307,343 | 281,137 | ||||||
Share-based compensation | (5,491) | 11,662 | 2,344 | 19,711 | ||||||
Loss (gain) on asset sale | 108 | 2,451 | (6,476) | (29,347) | ||||||
Foreign exchange and other (gain) loss | (6,010) | (9,612) | 3,768 | (19,587) | ||||||
Adjusted EBITDA | 128,998 | 129,963 | 490,233 | 373,618 |
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", "contemplates" or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.
Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided herein including, but not limited to, information provided in the "Funds Flow from
Forward-looking 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 which 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; royalty regimes and effects of regulation by government agencies; 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; future operating costs; the general stability of the economic and political environments in the jurisdictions where we operate; inflation, interest rate and exchange rate expectations; pandemics; and impacts of geopolitical events such as the hostilities in the
The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's services and the ability of the Company's customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company's ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; artificial intelligence development and implementation; cyber-attacks; determinations the by
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 available on SEDAR+ at www.sedarplus.ca. 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.
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