CALGARY, ALBERTA--(Marketwire - May 9, 2012) - Calmena Energy Services Inc. ("Calmena" or the "Company") (CEZ.TO - News) is pleased to announce its financial results for the first quarter ended March 31, 2012. All figures are reported in Canadian dollars unless otherwise stated. Our unaudited condensed consolidated financial statements and related management's discussion and analysis for the period will be filed separately on SEDAR (www.sedar.com), which should be reviewed in conjunction with this press release.
-- Consolidated revenue of $49.1 million and EBITDAS of $9.8 million for
the quarter ended March 31, 2012 were $18.9 million and $5.3 million
higher respectively compared to the same period in 2011 reaching record
levels and marking the third consecutive quarter of growth. Canada, US
and Mexico showed substantial quarter over quarter improvements.
-- Canada achieved a 13% increase in revenue and a 23% increase in EBITDAS
over 2011 with pricing and utilization increases evident in contract
drilling, equipment rentals and frac fluids management. Our service
lines in Canada are driven by oilsands activity, horizontal drilling and
multi-stage fracing, all of which have seen strength in 2012.
-- Directional services in the US achieved an 86% increase in revenue and
an 82% increase in EBITDAS over 2011 with improvements in both pricing
and utilization. Directional services in the US is driven by the
horizontal drilling rig count which, for the quarter ended March 31,
2012, was 20% higher than the same period in 2011. The US also
successfully deployed three internally manufactured Measurement While
Drilling ("MWD") kits and acquired a fourth kit in the quarter.
-- Mexico generated a 373% increase in revenue over 2011 and substantial
EBITDAS. Contract drilling achieved 100% utilization in the first
quarter of 2012 compared to 17% in the first quarter of 2011.
-- In Colombia, directional services worked throughout the quarter for
three customers, continuing to expand on operations that first started
in the second half of 2011. Building on recent successes, an additional
MWD kit was mobilized to Colombia in the first quarter of 2012 bringing
the total deployed to Colombia to three. Our contract for one drilling
rig was terminated in mid-March 2012, due to a scope change by the
operator. We are evaluating other opportunities for this rig in the
-- We successfully mobilized two single rigs to Brazil from our Canadian
fleet and began generating revenue in March 2012. We also commenced the
necessary modifications on two additional single rigs that will be
deployed to Brazil and should start generating revenue in the third
quarter of 2012. All of these rigs are being deployed under three year
contracts with Petrobras. In addition, our heli-portable rig continues
to generate revenues since being deployed late in the third quarter of
-- In Libya, contract talks regarding the resumption of operations with our
customer accelerated in recent months and we completed the majority of
the repairs necessary to re-active the drilling rigs. Since December
2011, we have received payment in full ($3.9 million) for all
outstanding amounts for services performed prior to the suspension of
operations in 2011.
SELECTED FINANCIAL INFORMATION
The tables below provide a summary of Calmena's financial and operating results as at and for the three months ended March 31, 2012 and 2011.
Three months ended
March 31, March 31,
($ thousands, except per share amounts) 2012 2011
Revenue 49,142 30,251
EBITDAS(i) 9,772 4,441
Net income (loss) for the period 3,518 (500)
Funds flow from continuing operations(i) 8,454 3,724
Net income (loss) per share - Basic and diluted 0.01 (0.00)
Funds flow from continuing operations per share- Basic
and diluted(i) 0.03 0.02
(i) see non-GAAP measures section of this release for a description of this term.
As at March 31, As at December 31,
($ thousands) 2012 2011
Total assets $ 226,907 $ 221,891
Borrowings and debt 55,339 51,266
Shareholders' equity $ 143,780 $ 142,647
We expect Canadian industry drilling and completion activity levels for the remainder of 2012 to be similar to 2011 with a focus on oil, horizontal completions and multistage fracing. We continue to forecast a strong year for our Canadian operations. Contract drilling experienced a solid first quarter on strong pricing, and although we are re-deploying two more single rigs from our Canadian fleet to Brazil in the second quarter, we are upgrading three of the remaining five single rigs with top drives to improve marketability and are adding one automated hydraulic range III single drilling rig to our fleet in the third quarter, which will be fit for purpose for depths ranging from 1,000 to 2,500 meters. Our double drilling rig is contracted to July 2012, and after a short break for scheduled maintenance, we expect the contract will be renewed at least until the end of 2012. We expect wireline technologies to show a significant increase from 2011 as added capacity, expanded service offerings and increased sales focus have resulted in the awards of horizontal completion projects with major operators in the Duvernay and Montney. Our ongoing capital investments in equipment rentals and frac fluids management are generating increased revenue and profitability which we expect will continue for the remainder of 2012.
Industry horizontal drilling activity in the US leveled off in the first quarter of 2012 compared to the fourth quarter of 2011, but is 20% higher than the same quarter of 2011. We believe that the current horizontal drilling activity levels are sustainable for the remainder of 2012. Our US directional services experienced a very strong first quarter of 2012, and we expect continued growth during 2012 as a result of increasing market share in our core mid-continent market and expansion to the West Texas and Gulf Coast land markets. Supporting this, we added four new MWD kits in the first quarter of 2012 and we are planning to add an additional twelve new kits, more than doubling our 2011 capacity, by the fourth quarter of 2012. All of our new 2012 positive and rotary pulse MWD kits will be manufactured internally, lowering costs and repair turnaround time and improving standardization of our MWD platform.
All five drilling rigs in Mexico are operating under contract and we expect utilization to remain high for the balance of 2012. Three of the five rigs are contracted to the end of 2012 and the other two are contracted to June 2012 and July 2012. Activity is picking up in Mexico, and interest in our drilling rigs remains high. We are confident that the two contracts expiring in June and July 2012 will be re-contracted or renewed at least until the end of 2012. Our two directional services kits remain working under contract, which we expect will continue for the remainder of 2012. During 2012 we purchased two MWD kits to replace the two MWD kits we had been renting from a third party which will result in improved EBITDAS.
Directional services in Colombia is growing rapidly. In January 2012, we signed three contracts resulting in revenue of $1.0 million in the first quarter of 2012 which we believe will increase as we build our local reputation as a quality service provider. In anticipation of growth, we have set up a repair shop, and are planning to modify and re-deploy additional directional kits to Colombia in the second half of 2012. Our drilling contract in Colombia was terminated in mid-March 2012, due to a scope change by the operator. We are confident that this rig will be re-contracted in Colombia or elsewhere in the region. Demand for this type of drilling rig is high and market conditions have improved since we first entered the Colombia market.
In Brazil, two single rigs deployed to Brazil from Canada began operating late in the first quarter, and two additional single rigs will be re-deployed to Brazil from Canada and start generating revenue when they spud in the third quarter of 2012. All four rigs are operating under three year contracts with Petrobras. Our heli-portable drilling rig should continue to generate revenue continuously for the remainder of its four year contract term. We anticipate operational results will continue to improve as we work through initial start-up periods on these new rigs. Our Brazil business should start to realize the full financial potential of these investments during the fourth quarter of 2012.
Developments in Libya are positive and we are cautiously optimistic that operations could recommence as early as the second quarter of 2012.
Overall, sustained strength in Canada, US and Mexico should continue throughout the year. With Libya potentially resuming operations as early as the second quarter and our Brazil operations emerging from startup mode in the fourth quarter we should see the full financial potential of our international strategy realized in 2012.
ABOUT CALMENA ENERGY SERVICES INC.
Calmena is a diversified energy services company that provides well construction services to its customers operating in Canada, the United States, Latin America and the Middle East and North Africa. The common shares of Calmena trade on the Toronto Stock Exchange under the symbol "CEZ".
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements relating to Calmena's plans, strategies, objectives, expectations and intentions. Expressions such as "may", "anticipate", "expect", "project", "believe", "hope", "estimate", "intend", "will", "continue", "foresee", and "forecast" and similar expressions and statements are intended to identify forward looking statements. Such statements represent Calmena's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt, revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Calmena believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Calmena's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Calmena.
In particular, forward-looking statements included in this news release include, but are not limited to, expected drilling activity in Canada in 2012; expectations as to levels of horizontal drilling and oil well completions in 2012 in Canada and the United States; the focus of our capital expenditure program and rig utilization rates and pricing in 2012; timing of deployment of two drilling rigs from Canada to Brazil and revenue generated therefrom; expectations regarding renewal of double rig contract; the impact on the Company in 2012 as a result of adding capacity to the wireline technologies fleet, from diversification of the Company's client base and from added sales resources; expectations regarding additional investment in frac fluids management and equipment rentals and the effect thereof on activity levels and growth in these service lines; horizontal drilling activity levels in the US and potential for growth of directional drilling services in the United States in 2012, including the addition of new directional drilling kits and anticipated effect of the new kits on Calmena's penetration of its core mid-continent market, its expansion into West Texas and the Company's reliance on rental kits; plans to manufacture the 2012 positive pulse MWD kits internally and the effect on Calmena's costs, repair turnaround time and standardization of its MWD platform; expectations for operations in Mexico in 2012, including contract drilling utilization, continuation of directional services kits working under contract; effect of establishing a repair facility in Bogota and deploying additional directional equipment to Colombia on future opportunities and growth; expectations for increasing revenue from Colombian directional drilling operations; expectations as to the strength of the Colombian drilling industry, including demand for drilling rigs and market conditions; timing of deployment of additional directional kits to Colombia; utilization of our drilling rig in Colombia and ability to re-contract the rig at the end of its current contract; ability to generate revenue from the heli-portable drilling rig and four single rigs in Brazil; effect of continuing operational refinements, startup costs and the staged introduction of the single rigs in Brazil on the Company's results of operations and financial performance and expected timing of realization of full financial potential of such investments in Brazil; terms of drilling rig contracts in Brazil; timing of and deployment of two additional rigs into Brazil: timing for re-commencement of operations in Libya; the outlook for Calmena's operations, including the Company's strategy for the remainder of 2012; specific events and trends in the oil and gas industry; statements with respect to benefits from the particular forward-looking statements included in this news release; and the statements under the heading "Outlook" in this news release.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Calmena's control, including, but not limited to, the impact of general economic conditions; industry conditions and changes in industry conditions; volatility of commodity prices; decreased demand for energy services; competition from other energy services providers; the lack of availability of qualified personnel or management; ability of Calmena to re-finance or extend the maturity date of its senior debt and generate positive cash flow; failure of counter parties to perform on contracts; failure to successfully negotiate new contracts or renew existing contracts; failure to successfully deploy rigs; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; risks associated with international operations, including, but not limited to, effect of civil unrest on the Company's operations in Libya; seasonality; loss of key customers; fluctuations in foreign exchange or interest rates and stock market volatility; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to, oilfield equipment rentals and production and ancillary services; liabilities and risks, including environmental liabilities and risks inherent in oil and natural gas operations; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; ability to access sufficient capital from internal and external sources; failure to successfully negotiate contracts for drilling rig operations; failure to realize the anticipated benefits of the Company's investments; and the other risks considered under "Risk Factors" in our annual information form for the year ended December 31, 2011 which is available on www.sedar.com.
With respect to forward-looking statements contained in this news release, Calmena has made assumptions regarding, but not limited to: the implementation of the Company's international growth strategy; current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; ability of Calmena to re-finance or extend the maturity date of its senior debt; ability of Calmena to renew existing contracts and enter into new contracts; rig utilization and pricing; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; industry conditions; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to oilfield equipment rentals and production and ancillary services; effects of regulation by governmental agencies; trends in Calmena's operations; and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this news release in order to provide Shareholders with a more complete perspective on Calmena's current and future operations and such information may not be appropriate for other purposes. Calmena's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Calmena will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this news release and Calmena disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
NON GAAP MEASURES
The following measures are used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net income (loss) and net income (loss) per share as calculated in accordance with GAAP:
EBITDAS (Earnings before interest, income taxes, depreciation and amortization, other items of income and expense and share based compensation) - Management believes that EBITDAS as derived from information reported in the Consolidated Statement of Operations is a useful supplemental measure as it provides an indication of the Company's ability to generate funds by the Company's core business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how non-cash depreciation and amortization charges affect results. See the reconciliation of EBITDAS to net income (loss) in the Company's management's discussion and analysis for the three months ended March 31, 2012.
Funds flow from continuing operations: Management believes that in addition to cash generated from operations, funds flow from continuing operations is a useful supplemental measure because it provides an indication of the funds generated by the Corporation's principal business activities prior to the consideration of working capital, which is primarily made up of highly liquid balances. See the reconciliation of funds flow from continuing operations in the Company's management's discussion and analysis for the three months ended March 31, 2012.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Calmena Energy Services Inc.
President and Chief Executive Officer
(403) 366-2066 (FAX)
Peter J. Balkwill
Calmena Energy Services Inc.
Vice President, Finance & CFO
(403) 366-2066 (FAX)
700, 333 - 7th Avenue SW
Calmena Energy Services Inc.
Calgary, Alberta T2P 2Z1