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CWC ENERGY SERVICES CORP. ANNOUNCES RECORD SECOND QUARTER AND YEAR-TO-DATE 2022 OPERATIONAL AND FINANCIAL RESULTS AND AMENDMENT AND EXTENSION OF ITS CREDIT FACILITIES

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CALGARY, AB, July 29, 2022 /CNW/ - (TSXV: CWC) CWC Energy Services Corp. ("CWC" or the "Company") announces the release of its operational and financial results for the three and six months ended June 30, 2022. The Financial Statements and Management Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2022 are filed on SEDAR at www.sedar.com.

CWC Energy Services Corp. Logo (CNW Group/CWC Energy Services Corp.)
CWC Energy Services Corp. Logo (CNW Group/CWC Energy Services Corp.)

Financial Highlights

$ thousands, except shares, per share
amounts, and margins


Three months ended


Six months ended




June 30,


June 30,




2022


2021

Change %


2022


2021

Change %


FINANCIAL RESULTS












Revenue












Contract Drilling


22,718


3,424

563 %


39,430


10,742

267 %


Production Services


19,963


13,073

53 %


44,082


30,424

45 %




42,681


16,497

159 %


83,512


41,166

103 %


Other income


-


(2,579)

(100 %)


-


(3,644)

(100 %)














Adjusted EBITDA(1)


7,600


2,489

205 %


16,026


7,343

118 %


Adjusted EBITDA margin (%)(1)


18 %


15 %



19 %


18 %















Net income (loss)


2,664


(759)

n/m(3)


6,103


(312)

n/m(3)


Net income (loss) margin (%)(2)


6 %


(5 %)

11 %


7 %


(1 %)

8 %














Capital expenditures


12,682


1,434

784 %


15,473


2,709

471 %














Per share information:












Weighted average number of shares outstanding
– basic


509,786,609


504,534,525


509,459,831

505,286,936



Weighted average number of shares outstanding
- diluted


523,123,662


504,534,525


520,768,461

505,286,936















Adjusted EBITDA(1) per share - basic and diluted

$

0.01

$

0.00


$

0.03

$

0.01















Net income per share - basic and diluted

$

0.01

$

(0.00)


$

0.01

$

(0.00)















$ thousands, except ratios





June 30, 2022




December 31, 2021


FINANCIAL POSITION AND LIQUIDITY











Working capital (excluding debt)(1)





23,305





18,966


Working capital (excluding debt) ratio(1)





3.2:1





3.1:1


Total assets





241,827





226,645


Total long-term debt (including current portion)





49,773





45,847


Shareholders' equity





170,976





163,269


(1) Please refer to the "Non-GAAP and Other Financial Measures" section for further information.

(2) Net income margin is a Non-GAAP Measure which is calculated as net income divided by total revenue.

(3) Not meaningful.
































Working capital (excluding debt) for June 30, 2022 has increased $4.3 million (23%) since December 31, 2021 driven by increases in accounts receivable ($6.4 million (24%)) offset by decreases in prepaid expenses and deposits ($0.4 million (26%)) and increases in accounts payable ($1.6 million (17%)). Long-term debt (including current portion) of $49.8 million has increased $3.9 million (9%) from December 31, 2021 primarily due to the purchase of three (3) triple drilling rigs in June 2022 and partially offset by the payment of long-term debt from operating cash flows in the first six months of 2022.

Highlights for the Three Months Ended June 30, 2022

  • Record Q2 2022 revenue in CWC's seventeen (17) year history of $42.7 million, an increase of $26.2 million (159%) compared to $16.5 million in Q2 2021. Revenue increased $19.3 million (563%) in the Contract Drilling segment and $6.9 million (53%) in the Production Services segment in Q2 2022 compared to Q2 2021.

  • Record Q2 2022 Adjusted EBITDA(1) of $7.6 million, an increase of $5.1 million (205%) compared to $2.5 million in Q2 2021, which was the previous Q2 record.

  • Record Q2 2022 net income of $2.7 million, an increase of $3.5 million compared to net loss of $0.8 million in Q2 2021.

  • Purchase of three (3) triple drilling rigs and critical spare components for US$7.4 million (approximately C$9.6 million) on June 24, 2022.

  • Drilled Alberta's first lithium evaluation well showing the diversity and versatility of our equipment.

  • First Canadian drilling and well services company to publicly report our Scope 1 and 2 emissions in our 2022 ESG Report.

     (1)    Please refer to the "Non-GAAP and Other Financial Measures" section for further information.

Highlights for the Six Months Ended June 30, 2022

  • Record revenue for the first six months of 2022 in CWC's seventeen (17) year history of $83.5 million, an increase of $42.3 million (103%) compared to $41.2 million in the first six months of 2021. Revenue increased $28.7 million (267%) in the Contract Drilling segment and $13.7 million (45%) in the Production Services segment compared to the first six months of 2021.

  • Record Adjusted EBITDA(1) for the first six months of 2022 of $16.0 million, an increase of $8.7 million (118%) compared to $7.3 million in the first six months of 2021.

  • Record net income for the first six months of 2022 of $6.1 million, an increase of $6.4 million compared to a net loss of $0.3 million in the first six months of 2021.

     (1)    Please refer to the "Non-GAAP and Other Financial Measures" section for further information.

Credit Facilities

On July 29, 2022, the Company exercised the accordion feature to expand the Credit Facility to an $80.3 million Bank Loan comprised of a $50.7 million Canadian syndicated facility, a US$12.0 million (C$15.6 million) U.S. syndicated facility, a $7.5 million Canadian operating facility and a US$5.0 million (C$6.5 million) U.S. operating facility. The company further amended the Credit Facility to extend the maturity to July 31, 2025.

Industry Overview

Average crude oil and natural gas prices


Three months ended


Jun. 30,

2022

Mar. 31,

2022

Dec. 31,

2021

Sep. 30,
2021

Jun. 30,

2021

Mar. 31,

2021

Dec. 31,

2020

Sep. 30,

2020

Crude oil









West Texas Intermediate (US$/bbl) 

108.41

94.29

77.19

70.56

66.12

57.79

42.75

40.92

Western Canadian Select (US$/bbl)

93.05

81.49

60.44

57.64

54.68

45.39

33.48

31.79










Natural gas









AECO (C$/mcf)

6.92

4.66

4.89

3.75

3.05

2.91

2.84

2.25

Source: GLJ Ltd price forecasts.

Russia's invasion of Ukraine and the western world's response with trade sanctions against Russia, including sanctions on crude oil and natural gas by certain countries, have resulted in a significant increase in crude oil and natural gas prices in the first six months of 2022. In addition, the continued re-opening of the global economy after being significantly slowed down in 2020 and 2021 due to the COVID-19 health pandemic, has resulted in a steady rise in global demand without a significant corresponding increase in global supply for crude oil and natural gas, further justifying the higher prices experienced in the first six months of 2022. However, significant inflationary increases and rising interest rates have sparked fears of a global recession, which has recently pulled WTI back to a range of US$95 to US$100/bbl. Despite recessionary fears, discussion about energy security is on the top of many governmental agendas, which should bode well for North American oil and gas activity and oilfield service companies for the foreseeable future.

Corporate Overview

CWC Energy Services Corp. is a premier contract drilling and well servicing company operating in Canada and the United States with a complementary suite of oilfield services including drilling rigs and service rigs. The Company's corporate office is located in Calgary, Alberta, with operational locations in Nisku, Grande Prairie, Slave Lake, Sylvan Lake, Drayton Valley, Lloydminster, Provost and Brooks, Alberta and U.S. offices in Denver, Colorado and Casper, Wyoming. The Company's shares trade on the TSX Venture Exchange under the symbol "CWC".

The Contract Drilling division operates under the trade name CWC Ironhand Drilling and is comprised of thirteen (13) electric triple drilling rigs with depth ratings from 3,600 to 7,600 metres and nine (9) telescopic double drilling rigs with depth ratings from 3,200 to 5,000 metres. All twenty-two (22) rigs have top drives, seventeen (17) have pad rig moving systems, eight (8) have 7,500 psi pumping systems, three (3) have carbon reduction bi-fuel capabilities, and two (2) have high line power capabilities. All of the drilling rigs are ideally suited for the most active depths for horizontal drilling in the Western Canadian Sedimentary Basin ("WCSB"), including the Montney, Cardium, Duvernay and other deep basin horizons, and select United States basins including the Permian, Eagle Ford, Niobrara, Denver-Julesburg ("DJ"), Powder River and Bakken.

The Production Services division operates under the trade name CWC Well Services. With a fleet of 143 service rigs, CWC is one of Canada's largest well servicing companies as measured by active fleet and operating hours. CWC's service rig fleet consists of 75 single, 54 double and 14 slant rigs providing services which include completions, maintenance, workovers and well decommissioning with depth ratings from 1,500 to 5,000 metres. In 2022, CWC chose to park 79 of its service rigs and focus its sales and operational efforts on the remaining 64 active service rigs due to the reduction in the number of service rigs currently required to service the WCSB and the tight labour market experienced in the industry for service rig crews.

Results of Operations


 Three months ended
June 30, 

 Change

 Change

 Six months ended
June 30, 

 Change

 Change

$ thousands, except per share amounts

2022

2021

$

%

2022

2021

$

%










Revenue

42,681

16,497

26,184

159 %

83,512

41,166

42,346

103 %

Direct operating expenses

30,262

13,116

17,146

131 %

57,575

30,664

26,911

88 %

Gross margin (1)

12,419

3,381

9,038

267 %

25,937

10,502

15,435

147 %










Other income

-

2,579

(2,579)

(100 %)

-

3,644

(3,644)

(100 %)










Selling and administrative expenses

4,819

3,471

1,348

39 %

9,911

6,803

3,108

46 %

Adjusted EBITDA(1)

7,600

2,489

5,111

205 %

16,026

7,343

8,683

118 %










Stock based compensation

231

167

64

38 %

462

343

119

35 %

Finance costs

605

246

359

146 %

993

505

488

97 %

Depreciation and amortization

2,982

2,581

401

16 %

5,908

5,277

631

12 %

Loss on disposal of equipment

227

418

(191)

(46 %)

564

206

358

174 %

Impairment of assets

-

-

-

n/m(2)

-

1,296

(1,296)

(100 %)

Income (loss) before income taxes

3,555

(923)

4,478

(485 %)

8,099

(284)

8,383

n/m(2)










Deferred income tax expense
(recovery)

891

(164)

1,055

 n/m(2)

1,996

28

1,968

n/m(2)










Net income (loss)

2,664

(759)

3,423

n/m(2)

6,103

(312)

6,415

n/m(2)










Net income (loss) per share









   Basic and diluted

$         0.01

$     (0.00)

$    0.00

n/m(2)

$       0.01

$      (0.00)

$    0.01

n/m(2)

(1)

Please refer to the "Non-GAAP and Other Financial Measures" section for further information. 

(2)

Not meaningful.

Contract Drilling – Canada and United States

$ thousands, except margins,
number of rigs, revenue per
operating day, and utilization

 Three months ended
June 30, 

 Change

 Change

 Six months ended
June 30, 

 Change

 Change

2022

2021

$

%

2022

2021

$

%

Revenue









Canada

7,784

1,323

6,461

488 %

20,573

8,465

12,108

143 %

United States

14,934

2,101

12,833

611 %

18,857

2,277

16,580

728 %


22,718

3,424

19,294

563 %

39,430

10,742

28,688

267 %

Direct operating expenses









Canada

5,848

1,417

4,431

313 %

14,832

6,663

8,169

123 %

United States

11,009

1,701

9,308

547 %

13,769

1,848

11,921

645 %


16,857

3,118

...