CALGARY, ALBERTA--(Marketwired - May 8, 2013) -
FIRST QUARTER 2013 RESULTS
Calmena Energy Services Inc. ("Calmena" or the "Company") (CEZ.TO) announces its financial results for the first quarter ended March 31, 2013. 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.
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, 2013 and 2012.
|Three months ended March 31,|
|($ thousands, except per share amounts)||2013||2012|
|Net (loss) income for the period||(1,629||)||3,518|
|Funds flow from operations*||2,307||8,454|
|Net (loss) income per share - Basic and diluted||(0.01||)||0.01|
|Funds flow from operations per share- Basic and diluted*||0.01||0.03|
|*||see non-GAAP measures section of this release for a description of this term.|
|March 31,||December 31,|
|Borrowings and debt, net of cash||(2,922||)||(1,413||)|
- For the three months ended March 31, 2013, the Company recorded revenue of $39.5 million and EBITDAS of $4.3 million compared to $49.1 million and $9.8 million respectively for the comparable period in 2012. The decrease in the period was the result of decreases in revenue and EBITDAS in Canada, the US and Latin America offset in part by an increase in in Libya;
- In April 2013, as part of the previously announced process to identify, examine and consider a range of strategic alternatives available to the Company with a view to enhancing shareholder value, Calmena completed the disposition of its wireline technologies business for cash proceeds of $12.1 million. The proceeds from the disposition were used to reduce borrowings and debt and trade payables. The process is ongoing and there will be further communication if the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary.
In Canada, we expect to see good utilization in contract drilling during 2013. Our double rig is contracted until late in 2013 and is expected to achieve over 300 days of utilization, making it one of the top utilized rigs in Canada. Our automated hydraulic single drilling rigs (AHS) achieved above average utilization in the first quarter of 2013 and based on customer commitments we are confident this trend will continue through the remainder of the year. Upgrades completed in the fourth quarter of 2012 have resulted in increased interest in these rigs. The equipment rentals and frac fluids business is seeing increased activity from its Sundre and Valleyview locations, due to their strategic proximity to major resource plays. As a result we are beginning to see improvements in service and fluid handling revenue, even with the weighting of sales shifting from higher revenue oil based applications to water fracs.
Although the US has had a slower than usual start to the year in Calmena's specific markets, there were significant sequential monthly improvements in utilization in March and April. We are forecasting utilization to continue to improve throughout the second quarter leading to strong results for the remainder of 2013. After more than doubling capacity in 2012, we are focusing primarily on maximizing utilization on our existing fleet and improving margins.
Very recent budgetary issues between Pemex and the Mexican government have caused uncertainties and a temporary suspension of onshore drilling operations in Chicontepec, for all contractors which is being implemented in May. As a result, we have received thirty day notices of contract termination on four of our five rigs, and the contract for our fifth rig, which is scheduled to expire in May, is unlikely to be renewed in the near term. According to Pemex's stated plans, there are multiple integrated service and production sharing arrangements being awarded by Pemex that we expect will result in a recovery in demand for drilling rigs in Mexico during the second half of 2013.
In Colombia, our directional services business is currently contracted to a customer for up to seven wells. Subsequent to the completion of the Ecopetrol contract in February, we have racked our drilling rig in country and rationalized overhead costs. We continue to market our drilling rig in Colombia and Mexico.
In Brazil, our heli-portable drilling rig continues under contract but has not been assigned its next well location and we have received instructions to move the drilling rig to a rack site. Our four singles rigs remain idle and are racked in one of our yards in Brazil. We are rationalizing costs and marketing the four single rigs, which Calmena believes are among the fastest and most efficient of their size, in Brazil and elsewhere in Latin America.
The environment in Libya is unpredictable and despite the announced targets and spending expectations by the government, there is uncertainty as to the 2013 drilling plans. We currently have one rig operating in the Waha field and our second rig is currently affected by labour related issues, which we expect will be resolved. Despite the current challenges and uncertainty in Libya we believe that at some point, the country must increase oil and gas production and that our rigs will be utilized.
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".
This press 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 for Calmena's operations in 2013, and 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 press release include, but are not limited to, statements with respect to statements with respect to the Company's plans to identify, examine and consider strategic alternatives and timing of communications to shareholders with respect thereto; anticipated utilization of our contract drilling equipment in Canada during 2013; expectations regarding renewal of the contract for Calmena's double drilling rig; anticipated total year financial results for equipment rentals and frac fluids; effect of reallocation of assets, broadening of geographic scope of services and added management and sales resources on service and frac fluid handing revenue; expectations as to utilization of horizontal drilling rigs in the United States for the second quarter and the remainder of 2013; Calmena's plans to focus on maximizing utilization on its existing fleet and improving margins in the United States in 2013; anticipated effect of Pemex awarding new production sharing agreements on the demand for Calmena's drilling rigs in 2013; anticipated effect of increased demand for Calmena's drilling rigs in 2013 on utilization for the second half of 2013; anticipated effect of termination of certain of Calmena's drilling rig contracts in Mexico on results during the second and third quarters; Calmena's beliefs about the speed and efficiencies of its single rigs in Brazil; outlook for drilling activity in the Waha field in Libya; the Company's expectations regarding resolution of labour issues in Libya and the potential for future labour issues; the Company's beliefs regarding oil and gas production in the Waha field and the utilization of Calmena's rigs; the outlook for Calmena's operations, including the Company's strategy for the remainder of 2013, including the statements under the heading "Outlook" in this press 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, failure to successfully negotiate and/or complete any transaction pursuant to the Company's strategic alternatives process; failure to achieve an increase in demand for drilling rigs as a result of Pemex awarding new production sharing agreements; 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; and the other risks considered under "Risk Factors" in our annual information form for the year ended December 31, 2012 which is available on www.sedar.com.
With respect to forward-looking statements contained in this press 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 statements provided in this press 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 press 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 measure is used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. This measure should not be considered alternatives to net (loss) income and net (loss) income 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 unaudited condensed 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, 2013.
Funds flow from continuing operations: Management believes that in addition to cash generated from operations, funds flow from 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 operations in the Company's management's discussion and analysis for the three months ended March 31, 2013.